Anybody Care?
the net loss for the second quarter of fiscal 2002 was $35.6 million, or a loss of $0.27 per share, compared with a GAAP net loss of $30.9 million, or a GAAP loss of $0.23 per share reported in the first quarter.
Transmeta will lay off 40% of their workforce in order to conserve cash - maybe they will not go out of business for another 10 quarters - instead of 7 or 8.
Transmeta Corp. Reports Q2 Revenue of $7.5 million, an 82% Increase over Q1
Restructuring Provides Path to Profitability, Reduced Operating Expenses
SANTA CLARA, Calif.--(BUSINESS WIRE)--July 18, 2002--Transmeta Corporation today reported net revenue of $7.5 million for its second quarter of fiscal 2002, ended June 28, 2002, which represents an increase of $3.4 million or 82 percent over first quarter revenue of $4.1 million.
Pro forma net loss, which excludes the effects of charges related to restructuring, as well as other non-cash charges, was $24.7 million, or a loss of $0.18 per share, compared with a pro forma net loss of $23.2 million or a loss of $0.17 per share in the first quarter. Excluding this quarter's accounting effects of previously recorded inventory purchase commitments, the pro forma net loss was $25.3 million, or $0.19 per share. In accordance with generally accepted accounting principles (GAAP) the net loss for the second quarter of fiscal 2002 was $35.6 million, or a loss of $0.27 per share, compared with a GAAP net loss of $30.9 million, or a GAAP loss of $0.23 per share reported in the first quarter.
"We are very pleased with the company's progress in the second quarter, and believe we will continue to see increased customer adoption of the TM5800 product in the third quarter and beyond," said Matthew R. Perry, president and CEO. "In the past few months, we have announced several important customer design wins, including Hewlett-Packard's new Compaq Evo Tablet PC, which is scheduled to ship later this year. With the demand for mobile computing devices growing faster than desktop PC's, Transmeta is extremely well positioned to increase market share and revenue in the quarters to come," Dr. Perry said.
Restructuring Actions/Profitability Goal
Transmeta announced that it is taking restructuring actions today to streamline the company and accelerate its path to profitability, including reducing its workforce by approximately 40 percent or 200 people. The company's goal is to lower operating expenses to approximately $20 million per quarter beginning in the fourth quarter, and to reach profitability in the fourth quarter of 2003.
The Q2 restructuring charge of $10.6 million includes costs associated with the consolidation of excess facilities, equipment and licenses. An additional one-time third quarter restructuring charge for the payment of severance and benefits related to the workforce reduction is expected to be in the range of $4.0 million to $4.5 million.
"We planned the restructuring very carefully, balancing Transmeta's need to achieve operating efficiency with the ability to preserve the resources necessary to maintain and enhance our technological innovation, product excellence and customer service," Dr. Perry said.
The company also said that it has decided not to productize the TM6000, but will work with customers to develop future system-on-a-chip solutions that will address their design requirements. "Our flagship product, the TM5800, provides customers with the balance of long battery life, high performance and low cost that they require. We will continue to improve the features and capabilities of the TM5800, addressing evolving customer needs for next generation designs," Dr. Perry said.
Q2 Customer Announcements of Crusoe-based Products
Several customers announced new Crusoe-based products during Q2 2002.
In April:
SONY announced its VAIO U series notebook, using the 867 MHz TM5800 Crusoe processor. The VAIO U runs the Microsoft Windows XP operating system and weighs only one and three-quarter pounds, filling the gap between a PDA and a full size notebook computer.
SONY also announced an upgrade to its VAIO C1 "picturebook" model, moving to an 867 MHz TM5800 Crusoe processor. The new C1 includes an MPEG video encoder and a TV tuner, enabling it to record television programs off the air.
Toshiba announced two new models of the Libretto notebook, upgrading to TM5800 processor. These notebooks have up to 13 hours of battery life, and have added new features such as an SD card slot and 802.11(b) wireless technology.
OQO announced and demonstrated a 250-gram computer that fits in your hand. This tiny device is a full Windows XP computer with a four-inch screen, 10-gigabyte hard disk and a Crusoe processor.
In June:
Hewlett-Packard announced that it will use Transmeta's 1 GHz Crusoe TM5800 processor in its Compaq Evo Tablet PC. The Evo is designed to run Microsoft's forthcoming Windows XP Tablet PC Edition software, which is scheduled to launch later this year.
Fujitsu announced new models of its P2000 and P1000 Lifebook notebooks for sale in the US, using 867MHz and 800 MHz Crusoe processors, respectively. Fujitsu has been selling these notebooks in Japan since the first quarter of 2002.
Gericom, one of the fastest growing suppliers of notebooks in Europe, announced that it will offer a Crusoe based notebook in Europe during the third quarter of 2002. The Gericom A2 notebook will have an 800 MHz Crusoe processor and weigh only 3.5 pounds.
Antelope Technology announced that Crusoe would power its Mobile Computer Core, which incorporates IBM's Meta Pad technology. Antelope's MCC weighs 250 grams, has a 10-gigabyte hard disk and a Crusoe processor. The Mobile Computer Core can be inserted into a PDA size display, a desktop docking station or into a notebook device bay.
NEC announced the first use of a Crusoe processor in a desktop computer. The NEC "Mate" is a complete PC built into an LCD monitor, including a DVD player in the base of the monitor.
Current Financial Outlook for Third Quarter 2002
"The overall PC market has softened somewhat, as you know, and mobile computers are being affected as well, although not as dramatically as desktops. Considering the weak worldwide economy, we believe we should take a conservative view of revenue growth in the second half of the year. Our business plan has to balance expense control with appropriate investments in product and customer development to keep our competitive edge now and in the years to come," Dr. Perry said.
The following outlook statements are based upon current expectations. These statements are forward looking, and actual results could differ materially. For the third quarter of fiscal 2002:
Revenue for the third quarter of fiscal 2002 is expected to be flat to up 5 percent
Gross margins for the third quarter of fiscal 2002 will be approximately 25 percent
Operating expenses for the third quarter of fiscal 2002 will be approximately $20 million, before an additional one-time third quarter restructuring charge for the payment of severance and benefits related to the workforce reduction
Conference Call
The company will hold a conference call at 2 pm Pacific Time on Thursday, July 18, 2002, to discuss second quarter results. To participate, please dial (719) 457-2637 at approximately 1:50 pm. A live webcast of the conference call will be available via the company's website at www.transmeta.com. A replay of the call will be available 1 hour after the completion of the call for one week. To access the replay, dial (888) 203-1112, Passcode 472791.
About Transmeta Corporation
Transmeta develops and sells software-based microprocessors and develops additional hardware and software technologies that enable computer manufacturers to build computers that simultaneously offer long battery life, high performance and x86 compatibility. Transmeta's family of Crusoe microprocessors is targeted at the notebook, Tablet PC and Internet appliance segments of the mobile Internet computer market, as well as a range of embedded applications.
To learn more about Transmeta visit www.transmeta.com.
Note to Editors: Transmeta and Crusoe are trademarks and/or registered trademarks of Transmeta Corporation in the United States and/or other countries. All other trademarks are the properties of their respective owners.
Safe Harbor Statement
This release contains forward-looking statements regarding future events or the future financial performance of the company, which statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements are only predictions, which may differ materially from actual results or future events. All such forward-looking statements are based upon our current expectations but involve inherent risks and uncertainties. Such forward-looking statements speak only as of the date of this release, and the company will not necessarily provide updates of its forward-looking projections or forecasts. Risks and uncertainties that may have material effects on our future performance include general economic conditions, including the recent significant slowdown in the technology sector and semiconductor industry, the timing, rescheduling or cancellation of significant customer orders, potential fluctuations in our quarterly results, dependence on increasing demand for our Crusoe products, difficulties in developing or manufacturing new products in a timely and cost effective manner, market acceptance of our new products and of our customers' systems using our products, the growth of emerging markets that we are addressing, our customer concentration, the loss of revenue if a major customer were to cancel, reduce or delay a product order, inventory write-offs from a failure to forecast product demand accurately, our dependence on third parties for sourcing materials and providing manufacturing services, delays in product deliveries as we transition to smaller geometry process technologies, intense competition from Intel and others, rapid technological change, patents and intellectual property rights, volatility of our stock price, and the cyclical nature of the semiconductor market. We urge investors to review our regular filings with the Securities and Exchange Commission, including specifically our most recently filed reports on Form 10-K, which identifies and describes many of these and other important risk factors that could cause our actual results to differ from those contained in these forward-looking statements.
TRANSMETA CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
The following pro forma supplemental information excludes the
amortization of deferred charges and intangible assets, non-cash stock
compensation awards, in-process research and development, inventory
related charges, restructuring charges, and effects of previously
recorded inventory purchase commitments.
Three Months Ended Six Months Ended
----------------------------------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
--------- --------- --------- ---------
(unaudited) (unaudited)
Net revenue $ 7,539 $ 10,531 $ 11,686 $ 29,101
Cost of sales 6,200 5,895 9,036 16,276
--------- --------- --------- ---------
Gross margin 1,339 4,636 2,650 12,825
Operating expenses
Research and
development 19,184 17,233 37,263 34,359
Selling, general
and
administrative 8,737 8,861 16,671 17,851
--------- --------- --------- ---------
Total operating
expenses 27,921 26,094 53,934 52,210
--------- --------- --------- ---------
Operating loss (26,582) (21,458) (51,284) (39,385)
Interest and
other, net 1,287 3,697 2,777 8,438
--------- --------- --------- ---------
Loss before
provision
for income taxes (25,295) (17,761) (48,507) (30,947)
Provision for
income taxes 2 3 25 16
--------- --------- --------- ---------
Net loss $ (25,297) $ (17,764) $ (48,532) $ (30,963)
========= ========= ========= =========
Net loss per share--
basic and diluted $ (0.19) $ (0.14) $ (0.36) $ (0.24)
Weighted average
shares
outstanding--
basic and diluted 133,868 128,478 133,427 127,863
The pro forma amounts
have been adjusted to
eliminate the following:
Stock compensation $ (2,558) $ 5,650 $ 2,246 $ 11,777
Amortization of
deferred
charges and
intangible assets 2,848 4,109 5,696 7,488
Restructuring
charges 10,624 -- 10,624 --
In-process research
and development -- 13,600 -- 13,600
Excess inventory
and purchase
commitment charge (583) 28,131 (583) 28,131
TRANSMETA CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
----------------------------------------------------
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
--------- --------- --------- ---------
(unaudited) (unaudited)
Net revenue $ 7,539 $ 10,531 $ 11,686 $ 29,101
Cost of sales 5,617 34,026 8,453 44,407
--------- --------- --------- ---------
Gross margin 1,922 (23,495) 3,233 (15,306)
Operating expenses
Research and
development 19,184 17,233 37,263 34,359
In-process research
and development -- 13,600 -- 13,600
Selling, general
and administrative 8,737 8,861 16,671 17,851
Restructuring
charges 10,624 -- 10,624 --
Amortization of
deferred charges
and intangible
assets 2,848 4,109 5,696 7,488
Stock compensation (2,558) 5,650 2,246 11,777
--------- --------- --------- ---------
Total operating
expenses 38,835 49,453 72,500 85,075
--------- --------- --------- ---------
Operating loss (36,913) (72,948) (69,267) (100,381)
Interest and
other, net 1,287 3,697 2,777 8,438
--------- --------- --------- ---------
Loss before
provision
for income taxes (35,626) (69,251) (66,490) (91,943)
Provision for
income taxes 2 3 25 16
--------- --------- --------- ---------
Net loss $ (35,628) $ (69,254) $ (66,515) $ (91,959)
========= ========= ========= =========
Net loss per
share--basic and
diluted $ (0.27) $ (0.54) $ (0.50) $ (0.72)
Weighted average
shares
outstanding--
basic and diluted 133,868 128,478 133,427 127,863
TRANSMETA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 28, Dec. 28,
2002 2001 (1)
-------- --------
Assets (unaudited)
Current assets
Cash and short-term investments $180,376 $241,688
Accounts receivable, net 1,671 1,749
Inventories 5,896 1,388
Prepaid and other current assets 5,915 7,091
-------- --------
Total current assets 193,858 251,916
Property and equipment, net 9,870 11,622
Other assets 41,827 45,486
-------- --------
Total assets $245,555 $309,024
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and other
current liabilities $ 15,339 $ 17,103
Current portion of accrued
restructuring costs 2,904 --
Current portion of
long-term obligations 16,156 17,661
-------- --------
Total current liabilities 34,399 34,764
Long-term accrued
restructuring costs 6,091 --
Long-term payables 22,176 29,295
Stockholders' equity 182,889 244,965
-------- --------
Total liabilities and
stockholders' equity $245,555 $309,024
======== ========
(1) Derived from audited financial statements included in the
Company's Form 10-K for the fiscal year 2001 filed with the
Securities and Exchange Commission.
--------------------------------------------------------------------------------
Contact:
Transmeta Corporation
S. Olav Carlsen, 408 919-3000 (Investor)
Phillip Bergman, 408 919-6818 (Media)
or
Stapleton Communications Inc.
Deborah A. Stapleton, 650/470-0200 |
