SANTA CLARA, Calif.—(BUSINESS WIRE)—Feb. 23, 2006—
Transmeta Corporation (Nasdaq:
TMTA), the leader in
efficient computing technologies, today announced financial results
for the fourth quarter and fiscal year ended December 31, 2005.
Highlights for the 2005 Full Year
-- Continued to execute a successful transformation of the
Company's business model.
-- Created and executed significant new service relationships
with Sony and Microsoft.
-- Completed technology transfer and recorded revenue from
Fujitsu and Sony, our second and third licensees of our
LongRun2 technologies.
-- Revenue increased by 147% to $72.7 million compared to $29.4
million in 2004.
-- License and service revenue of $48.1 million, a 351% increase,
compared to $10.7 million for the 2004 full year.
-- Net loss significantly reduced from $106.8 million to $6.2
million.
-- Cash balance of $56.5 million at December 31, 2005, and no
long-term debt.
Business Update
"2005 has been a year of significant achievement and excellent
execution for Transmeta," commented Arthur L. Swift, president and
CEO. "We more than doubled our revenue, cut our losses by roughly $100
million and won major new relationships with marquee partners such as
Microsoft and Sony. Over the last two years, we've created significant
new revenue streams from licensing and services that have already
contributed substantially to our improved results. Our industry needs
low power solutions, and we think that we are uniquely positioned with
our innovative technologies and superb engineering talent."
The Company reported total revenue of $72.7 million, a 147%
increase, compared to $29.4 million for the 2004 full year. License
and service revenue was $48.1 million, a 351% increase, compared to
$10.7 million for the 2004 full year. As a result of Transmeta's
modified business model, the Company reported a significantly reduced
net loss of $6.2 million, or $0.03 per share in 2005 compared to a net
loss of $106.8 million, or $0.61 per share for the 2004 full year.
Included in the 2005 and 2004 results are restructuring and fixed
asset impairment charges of $2.0 million and $3.4 million,
respectively.
Revenue for the fourth quarter of 2005 was $13.3 million, slightly
ahead of the Company's previous guidance of between $12.0 and $13.0
million, compared to $11.2 million in the fourth quarter of 2004.
Gross margin for the fourth quarter was 47.0% compared to a negative
gross margin of 13.7% for the fourth quarter of 2004. The Company's
net loss of $2.1 million, or a loss of $0.01 per share, for the fourth
quarter of 2005 was better than the Company's earlier guidance of a
net loss between $5.4 to $5.9 million. This is compared with a net
loss of $28.1 million, or a loss of $0.15 per share, in the fourth
quarter of 2004.
The Company's cash, cash equivalents and short term investments at
December 31, 2005 totaled $56.5 million, which was $3.5 million ahead
of prior guidance. In addition, the Company ended the year with no
long-term debt as it paid its remaining $5.0 million debt obligation
to IBM in the fourth quarter of 2005, earlier than required by the
agreement.
"The substantial progress that we made in 2005 enabled us to enter
2006 in a much better financial condition with more strategic and
financial flexibility versus this time last year," commented Mark R.
Kent, chief financial officer. "Our stated and primary objective
during the second half was to be break-even or better on a cash flow
from operations basis. We clearly met this goal as we ended the second
half with a positive cash flow from operations of $14.1 million. We
were thus able to repay a $5.0 million obligation six months ahead of
schedule, leaving us with no debt and $56.5 million in cash, higher
than our earlier goal of $53.0 million."
Guidance
For 2006, the Company is anticipating:
-- Full year revenue will be in the range of $60.0 to $72.0
million, substantially from licensing and services.
-- Full year net loss of $18 million to $12 million, or a loss of
$0.09 to $0.06 per share, which includes non-cash charges of
$7 million of patent amortization and $5 million of stock
option compensation expense.
-- First half revenue of at least $27 million.
-- First and second quarter revenue is in part dependent on the
timing of the recognition of approximately $8.9 million of
deferred revenue related to services performed in 2005.
-- First half negative operating cash flow no more than $10
million, second half return to positive cash flow.
"In contrast to a year ago, we enter 2006 with a much better
business outlook," added Kent. "We have very good visibility into
achieving most of the low-end of the revenue range based on
expectations from our current customers, and we can achieve the full
revenue range through already identified opportunities. Based on our
current visibility we expect a loss for the year, but it is manageable
while we build a business characterized by recurring revenue streams,
which we expect to begin to realize later in 2006 and 2007."
Conference Call
As previously announced, Transmeta's management will host a
conference call at 5:00 p.m. Eastern time / 2:00 p.m. Pacific time.
The conference call will be available live over the Internet at the
investor relations section of Transmeta's website at
www.transmeta.com. To listen to the conference call, please dial (913)
981-4915. A recording of the conference call will be available for one
week, starting one hour after the completion of the call, until 9:59
p.m. Pacific time on March 2. The phone number to access the recording
is (888) 203-1112, and the passcode is 7271974. For callers outside
the U.S., please dial (719) 457-0820, with the same passcode.
About Transmeta Corporation
Transmeta Corporation develops and licenses innovative computing,
microprocessor and semiconductor technologies and related intellectual
property. Founded in 1995, Transmeta first became known for designing,
developing and selling its highly efficient x86-compatible
software-based microprocessors, which deliver a balance of low power
consumption, high performance, low cost and small size suited for
diverse computing platforms. We also develop advanced power management
technologies for controlling leakage and increasing power efficiency
in semiconductor and computing devices. To learn more about Transmeta,
visit
www.transmeta.com.
Safe Harbor Statement
This release contains forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such statements speak only as of the date of this
release, and we will not necessarily provide updates of our
projections or other forward-looking statements. Investors are
cautioned that such forward-looking statements are subject to many
risks and uncertainties, and may differ materially or adversely from
our actual results or future events. Important risk factors that could
have material or adverse effects on our results include general
economic and political conditions, specific conditions and volatility
in the markets that we address, the potential loss of key technical
and business personnel, practical challenges in modifying our business
model, our ability to satisfy the continued listing requirements of
the Nasdaq Stock Market, the adoption and market acceptance of our
products and technologies by current and potential customers and
licensees, our inability to predict or ensure that third parties will
license our technologies or use our technologies to generate
royalties, the rescheduling or cancellation of significant customer
orders, difficulties in developing or manufacturing our products in a
timely and cost effective manner, our dependence on third parties for
sourcing materials and providing manufacturing services, intense
competition and competitive pressures, the ability to enter strategic
collaborations or raise financing on satisfactory terms, patents and
other intellectual property rights, and other risk factors. We urge
investors to review our filings with the Securities and Exchange
Commission, including our most recent reports on Forms 10-K, 10-K/A,
10-Q and 8-K, which describe these and other important risk factors
that could have an adverse effect on our results. We undertake no
obligation to revise or update publicly any forward-looking statement
for any reason.