Transmeta Reports Third Quarter 2007 Results

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

SANTA CLARA, CA. - Nov. 7, 2007 - Transmeta Corporation today announced financial results for the third quarter of fiscal 2007, ended September 30, 2007.

Revenue for the third quarter of 2007 was $44,000, which included $43,000 of services revenue and $1,000 of license revenue for royalty payments. This compared with revenue of $171,000 in the second quarter of 2007, which included $146,000 of services revenue and $25,000 of end-of-life product revenue.

All share and per share data included in this press release have been retroactively adjusted to account for the effect of the one-for-20 reverse stock split that the Company effected on August 17, 2007. Net loss attributable to common shareholders for the third quarter of 2007 was $12.7 million, or a loss of $1.24 per share, compared with a net loss of $11.5 million, or a loss of $1.15 per share, in the second quarter of 2007. The third quarter of 2007 results included restructuring charges totaling $109,000, non-cash charges of $1.7 million for amortization of intangible assets and non-cash charges of $3.6 million for the beneficial conversion feature of the Series B Preferred Stock sold to AMD in July 2007.

Gross margin for the third quarter of 2007 was 59 percent, compared with a gross margin of 53 percent in the second quarter of 2007.

The Company's cash, cash equivalents and short term investments at September 30, 2007 totaled $28.6 million, including the approximate $7.0 million in net proceeds that Transmeta received from AMD's investment in the Company in July 2007, and the approximate $11.6 million in net proceeds that the Company received from its securities offering in September 2007. The Company continues to be debt free.

In October, Transmeta entered into an agreement with Intel Corporation providing for a settlement of all claims between the two companies and for the licensing of 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. Under the agreement, Transmeta will grant to Intel a non-exclusive paid-up license and transfer technology related to its 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.

"During the third quarter, we reinforced our relationship with AMD through the strategic investment that AMD made in Transmeta in July 2007. In addition, we raised about $11.6 million in net proceeds from our securities offering in September 2007 and completed the restructuring program that we started earlier this year," said Les Crudele, president and CEO. "In October, we resolved our patent litigation with Intel, pursuant to an agreement that provides for Transmeta to receive an initial payment of $150 million and future payments of $20 million per year for each of the next five years. We believe these funds will give us the financial flexibility to execute on our strategy of developing and licensing our intellectual property. Having completed our restructuring, resolved our patent litigation, and taken steps to significantly strengthen our balance sheet, we can now concentrate our attention on developing our technology, building our licensing business, putting the building blocks in place to expand our customer base and creating long-term shareholder value."

Financial Tables

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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.