Transmeta to lay off 40 percent of workforce

Transmeta Corp. on Thursday posted a smaller-than-expected loss for its second fiscal quarter, but at the same time announced plans to lay off 200 workers, or about 40 percent of its workforce.

The company also said that it no longer planned to offer a version of its Crusoe processor called the TM6000. Transmeta will continue to improve its current model, the TM5800, and work with customers to develop "future system-on-a-chip" products, it said in a statement.

For the three months ended June 28 the company posted a net loss of $35.6 million, or $0.27 per share, on revenue of $7.5 million. The defecit was narrower than that of a year ago, when Transmeta lost $69.3 million, or $0.54 per share, but revenue was lower than last year's total of $10.5 million. The results are based on generally accepted accounting principles (GAAP), the company said in its statement.

On a pro forma basis, excluding restructuring costs, the Santa Clara, California, company lost $24.7 million, or $.18 a share, Transmeta said. Analysts polled by Thomson Financial/First Call had predicted on average a pro forma loss of $0.19 a share.

The layoffs are expected to lower the company's operating expenses to around $20 million per quarter by the fourth quarter of 2002, Transmeta said in the statement. Its operating expenses in the second quarter were $38.8 million.

"The actions will help us to streamline the company, while helping us reach our goal of profitability by the fourth quarter of 2003," said Matthew Perry, president and chief executive officer of Transmeta, in a conference call after the results were announced. "We are operating our business as if there will be no upturn in the economy, and planning very conservatively."

Crusoe is a chip for notebook PCs and other portable computers that uses very little power, producing a long battery life. Overall PC growth has been slow, but notebooks are growing at a faster rate than desktop PCs, which gives Transmeta hope for the future, Perry said.

Transmeta said it spent $19.1 million on research and development in the second quarter, up from $17 million in last year's second quarter.

Looking forward to the third quarter, Transmeta expects revenue growth of zero percent to 5 percent. The company will take a one-time restructuring charge of $4 million to $4.5 million in the third quarter for the payment of severance and benefits.

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