Transmeta Reports First Quarter 2007 Results

Update: Intellectual Ventures has acquired Transmeta Patent Portfolio on Jan. 28, 2009

SANTA CLARA, CA. – May 10, 2007 – Transmeta Corporation (NASDAQ: TMTA) today announced financial results for the first quarter of fiscal 2007, ended March 31, 2007.

Revenue for the first quarter of 2007 was $2.1 million, which included $2.0 million of service revenue and $140,000 of end-of-life product revenue. This compared with revenue of $2.4 million in the fourth quarter of 2006, which included $2.2 million of service revenue and $220,000 of end-of-life product revenue. Net loss for the first quarter of 2007 was $18.7 million, or a loss of $0.09 per share, compared with a net loss of $15.9 million, or a loss of $0.08 per share, in the fourth quarter of 2006. The first quarter of 2007 results included restructuring charges totaling $6.7 million, and an impairment charge on long-lived and other assets of $290,000, as well as non-cash charges of $1.7 million for amortization of intangible assets and $300,000 for stock-based compensation expenses.

Gross margin for the first quarter of 2007 was 26 percent, compared with a gross margin of negative 45 percent in the fourth quarter of 2006. The sequential increase in gross margin is primarily due to the write-down of inventory that the Company recorded in the fourth quarter of 2006.

The Company's cash, cash equivalents and short term investments at March 31, 2007 totaled $25.8 million. The Company continues to be debt free.

"In the first quarter of 2007 we made the difficult, but necessary, decision to reduce our spending by restructuring the company to focus on developing and licensing our technologies and intellectual property," said Les Crudele, president and CEO. "The restructuring is proceeding according to plan and, in some cases, is ahead of schedule. We expect to further reduce our headcount by 15 to 20 percent during the second quarter, mainly affecting general and administrative positions. As a result of the restructuring, we are no longer pursuing engineering services as a separate line of business and have also exited the business of selling microprocessor products.

"At the same time, we have dedicated additional resources to the development and licensing of our technologies and intellectual property. Our goal is to build a sustainable licensing business that can address a broader customer base, although we believe it will take us some time to build this business to the point where we can generate a dependable revenue stream. In the meantime, we believe that the steps we are taking will put us in a better position to execute on our new business model," said Mr. Crudele.

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About Transmeta Corporation

Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, we first became known for designing, developing and selling our 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 are presently focused on developing and licensing our advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices, and in licensing our computing and microprocessor technologies to other companies. To learn more about Transmeta, visit www.transmeta.com.