Chipmaker Transmeta beat analyst
expectations by a penny Thursday.
Transmeta (Nasdaq: TMTA) reported a
first-quarter loss of $13.2 million, or 10 cents per
share, on revenue of $18.6 million, excluding
amortization of deferred charges. Santa Clara,
Calif.-based Transmeta reported a loss of $16.7
million, or 56 cents per share, in the same quarter
last year.
A consensus of analysts had expected the
chipmaker to post a loss of 11 cents per share,
according to First Call.
Transmeta's revenue grew 50 percent in the first
quarter compared with the fourth quarter. But the
company's forecast for current-quarter growth isn't
quite as riveting.
"We currently expect that revenue will be similar or
slightly up" from the first quarter, Merle
McClendon, Transmeta's chief financial officer,
said on a conference call.
Still, the CEO said the company expects a good
year.
"Overall, we're very bullish on the year," CEO Mark
Allen said. "I'm encouraged by where we are with
our new products."
This is the company's second quarter of reporting
since its initial public offering in November.
Including amortization, Transmeta lost $22.7
million, or 18 cents per share, in the first quarter.
Transmeta chips work by emulating the x86 set of
instructions used by PC chips from Intel and
Advanced Micro Devices. Transmeta's
code-morphing software translates data used by
x86 applications and operating systems into
instructions that Transmeta's processor
understands.
The chipmaker counts Fujtisu, Hitachi, Sony, NEC
and a handful of other PC makers as its
customers.
The executives said two new PC makers will
release notebooks with Crusoe chips in the second
quarter in Japan. One of those companies will
release a Crusoe-based product in North America
in the third quarter.
Transmeta is also planning a new chip, due out
late in the second quarter, that it says will outdo
Intel's power-saving chips.
This new TM 5800 chip will use the less
power-hungry 0.13-micron manufacturing process.
Customers have samples now, company
executives said, and initial shipments will begin at
the end of the second quarter.
Transmeta expects that PC makers will pair the
chip--expected at speeds of 700MHz to
800MHz--with double data rate SDRAM memory
and a new version of its code-morphing software,
dubbed CMS 4.2. Altogether, the three elements
can cut power consumption up to 50 percent,
compared with its current TM 5600 processors,
Transmeta executives said.
As it increases production, Transmeta will draw
more chips from a new manufacturing partner,
Taiwan Semiconductor Manufacturing Co. IBM
currently manufactures the lion's share of
Transmeta chips.
Still, Transmeta has its work cut out for it. The
chipmaker wants to keep expanding its sales in the
notebook market and in the emerging
dense-server market. The company scored
victories in both areas during the quarter.
Transmeta's most formidable competitor is Intel,
analysts say. In January, the chipmaker
announced an energy-saving Pentium III chip
designed to compete with Transmeta's Crusoe
chip. The company plans to increase the clock
speed of its power-saving Pentium III to 600MHz in
the second half. However, the chip will continue to
run at 300MHz while a notebook uses battery
power.
"Intel has really been ratcheting up in response to
AMD and Transmeta. So as a result, its position is
stronger than it was six or nine months ago," Mike
Feibus, principal analyst at Mercury Research,
said in a recent interview.
That doesn't mean Transmeta won't do well, he
added. "But I don't expect to see a wholesale
defection (to Transmeta) either."
This week, NEC announced a pair of
corporate-oriented Versa notebooks with
Transmeta chips. Although Sony had been
shipping Transmeta-based Vaio notebooks in
North America since late 2000, NEC's new
notebooks represent the chipmaker's first
corporate win on the continent.
Despite the reluctance of some big-name PC
makers to use Transmeta chips so far, analysts
expect it to ship 1 million of its Crusoe chips this
year.
Transmeta shipped about 150,000 Crusoe chips in
2000, according to Mercury Research.
Mercury estimates Transmeta shipped about
150,000 chips in the first quarter but predicts it is
on track to ship about 1 million units on the year,
Feibus said.
"I think (Transmeta) is growing faster than we
thought it would late last year," he said.
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