Friday, December 21, 2007
Transmeta Outed by Hedge Fund (TMTA)
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Transmeta Corporation (NDAQ:TMTA) received a letter from its largest shareholder today expressing concern over yesterday’s staggering option grants and other recent developments that have bought serious questions to light regarding the company’s strategic direction. Riley Investment Management (RIM), which owns 6.4% of Transmeta, demanded several changes to protect shareholders.

The board of directors is tasked with prudently placing the interests of shareholders above their own and those of insiders. However, last night’s option grant totaling 725,000 shares to the company’s top four executives diluted shareholders by over 5% and almost doubled the company’s historical grants on a split-adjusted basis. The timing of the grant is also very disconcerting and ironic in that it was made at historically depressed levels – essentially giving executives $5 million of value at a great cost to shareholders. Obviously, RIM viewed this as a major issue and questioned the integrity of the board.

RIM also reiterated its belief that shareholders will be best rewarded through a distribution of cash and a monetization of the company’s intellectual property as opposed to management’s plan to fund business development and evaluating potential acquisitions. RIM believes that this strategy would result in proceeds in excess of $20 per share while management’s strategy would likely result in operating expenses that eat through the guaranteed $20 million per year revenue stream from Intel by lining the pockets of management and executives.

“In light of the failures of the management team and the Board, the company’s proposed strategy is especially disturbing,” said RIM in their letter. “Transmeta shareholders should ask a simple question –- would the current management team and board be able to raise $250 million from the public market to pursue a risky strategy with operating expenses of $25 million per year and no clear path to profitability? We believe the answer is unequivocally no.”

In the end, it will be interesting to see how the board responds to this letter as it makes several points that even average investors can identify with – most notably yesterday’s option grant. Combined, these factors make TMTA a stock worth watching!

Related Companies
Intel Corporation (INTC)
Advanced Micro Devices (AMD)
Texas Instruments Inc. (TXN)

12/21/2007 8:02:33 PM UTC  #    Comments [1]  |  Trackback
2/3/2008 3:26:47 PM UTC
April 24, 2000 - Transmeta Corporation announced today the closing of an $88,000,000 financing round consisting primarily of corporate investors.

The new corporate investors in Transmeta are America Online, Inc., Compal Electronics, Compaq Computer Corporation, First International Computer, Gateway, Phoenix Technologies, Samsung, SONY Corporation and Quanta Computer.

Existing Transmeta investors, including investment affiliates of Soros Fund Management, Paul Allen's Vulcan Ventures, Van Wagoner Capital Management, Invemed Associates, Tudor Investment Corporation, Five Points Capital, and Deutsche Bank, made up approximately $16,000,000 of the round.


November 6, 2000 - Transmeta Corporation (Nasdaq: TMTA) announced the initial public offering of 13 million shares of its common stock at $21 per share on The Nasdaq National Market. All shares were offered by Transmeta.

December 18, 2003 - Transmeta Corporation (Nasdaq: TMTA) announced today that it has priced the offering of 25,000,000 shares of its common stock at a price to the public of $2.90 per share.

November 12, 2004 - Transmeta Corporation (NASDAQ: TMTA) announced today that it has agreed to sell 11,083,333 shares of Transmeta's common stock at a price of $1.50 per share.

March 27, 2007 - Transmeta Corporation (NASDAQ:TMTA) today announced that on March 21, 2007 it received a letter from the Nasdaq Stock Market indicating that Transmeta is not in compliance with the Nasdaq Stock Market's requirements for continued listing because, for the previous 30 consecutive business days, the bid price of Transmeta's common stock had closed below the minimum $1.00

Aug. 15, 2007 - Transmeta Corporation (NASDAQ: TMTA) today announced that its Board of Directors has approved a reverse split of Transmeta's common stock at a ratio of one-for-20 shares, to take effect on Friday, August 17, 2007.

September 21, 2007 - The securities in the offering include up to 2,000,000 shares of Transmeta common stock and warrants to purchase up to 1,000,000 shares of Transmeta common stock, which securities are being offered in "units" at a price of $6.40 per unit. Each unit consists of one share of Transmeta common stock and a warrant to purchase 0.5 shares of Transmeta common stock at an exercise price of $9.00 per share for each share of common stock that the investor purchases in the offering.

July 6, 2007 – Transmeta and AMD today announced that AMD has invested $7.5 million in Transmeta in exchange for Transmeta preferred stock.

October 24, 2007 - Transmeta announced that it has reached an agreement with Intel to settle all claims between them and to license the Transmeta patent portfolio to Intel for use in current and future Intel products.
The agreement will grant Intel a perpetual non-exclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta, now existing or as may be filed during the next ten years. Transmeta will also transfer technology and grant to Intel a non-exclusive license to Transmeta's LongRun and LongRun2 technologies and future improvements. Under the agreement, Intel will covenant not to sue Transmeta for the development and licensing to third parties of Transmeta's LongRun and LongRun2 technologies.
The agreement provides for Intel to make an initial $150 million payment to Transmeta as well as to pay Transmeta an annual license fee of $20 million for each of the next five years.

Intel has filed a countersuit against rival Transmeta in the U.S. District Court in Delaware, alleging that Transmeta is infringing seven of Intel’s patents directed to processor functionality, including one that covers an "apparatus for controlling power usage." In October 2006, Transmeta sued Intel in the same court, reportedly alleging that several of Intel's popular Pentium processors infringe eleven Transmeta patents. In the countersuit, Intel reportedly stated that Transmeta does not have a legitimate claim to the patents because Transmeta has "withheld, concealed and/or mischaracterized" information in their patent applications. According to the report, each company has asked the court for an injunction barring the other from selling allegedly infringing products, and both have asked for an unspecified amount of financial damages.



February 1, 2008 - Riley Investment Management LLC (RIM which owns about 7 percent) expressing interest in seeking to acquire all of the outstanding shares of Transmeta not already owned by RIM or its affiliates for $15.50 per share in cash, subject to numerous conditions.

RIM an activist hedge fund founded by Bryant Riley in February 2000. The fund has a strong activist and operating background particularly in technology companies through its membership on boards of directors. RIM has successfully led to changes in management and control of companies and negotiated the sale of numerous business and business units in connection with its Board participation in those companies.

RIM other shareholders value concern were ESST,NETM,RGCI,ISSI,ZILOG,ALLIANCE SEMICONDUCTOR,CENTILLIUM COMMUNICATION
CDJ |c_djamelAT NOSPAMhotmail dot com
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