Not only is Transmeta backing out
of the chipmaking business, it might also be putting itself up for sale, analysts said this week.
The company’s board of directors is scheduled to outline its current
business model of designing, developing and selling x86-compatible
microprocessor products today.
The announcement follows an internal
audit Transmeta contracted to mull its options. While the company has
enjoyed some partnership and design success, analysts say it is
facing mounting financial losses and increased pressure
from Intel and AMD
.
The pressure is prompting speculation that Transmeta may bypass the
licensing business and make itself available for an acquisition. A pool
of analysts surveyed by internetnews.com suggests Transmeta’s
problems are not in execution, but rather in its strategic inability to develop
a product that was a clear win over larger competitors like
Intel.
A laundry list of possible takeover suitors mentioned by analysts
includes names like Fujitsu, Intel, AMD, Samsung and Microsoft.
A spokesman for Transmeta was not immediately available for comment.
“Certainly Transmeta’s earlier statement that they were mulling
getting out of the chip design business seemed to signal that they were
putting themselves up for sale,” Gordon Haff, senior analyst with
technology research firm Illuminata told internetnews.com.
“Assuming they are purchased, my expectation is that it will be
primarily an IP sale and wouldn’t necessarily expect Transmeta chips
under that name or a new name to continue on the market.”
Transmeta also has an attractive portfolio of low-power processors and
technologies. The company is shifting its Efficeon designs to move past
the thin-and-light form factors to accommodate a higher-power market.
The company has also marketed its Crusoe and Efficeon processors to
computer manufacturers to boost revenue. Its marquee
relationship is with HP
, which uses the low-power
chips to run its Compaq Evo Tablet PCs as well as thin clients.
As for just who might be interested in Transmeta, Haff points to AMD
or Intel if the intellectual property is what they need and the price is
right.
“A Japanese purchaser is probably the most likely possibility but,
again, likely just for IP that could be applied to non-x86 designs,” he
said.
Kevin Krewell, principal analyst for semiconductor research group
In-Stat said AMD could provide relative financial stability, and
Transmeta’s Efficeon would fill a gap in AMD’s mobile product line.
“There are still many questions about such an acquisition, not the
least of which is whether Transmeta would be worth the price at its
present market value, and what AMD would do with yet another
architecture and another design team,” Krewell said. “It might be
possible, however, for the companies to work out an arrangement short of
a merger.”
Rob Enderle, principal analyst and founder of IT research firm
Enderle Group, said AMD could use Transmeta’s technology to build a
stronger mobile position. But he dismisses the company as a suitor because it
is not as aggressive with IP as Intel. He also isn’t counting on AMD because of
its financial problems
with its memory division.
“I’d bet on Intel or Samsung, with Microsoft only interested if they
fully understood the Linux threat this would represent should it fall
into hostile hands,” Enderle said. “VIA could be very interesting but I
don’t see them funded to a level to do this. Fujitsu hasn’t been much of
a player for some time so I actually would bet more on Samsung who has
been coming up fast, seems willing to take chances like this, and would
likely both see the potential here and have the resources to take
advantage of it.”
Rick Whittington, a managing director with IT consultancy Caris &
Company also agreed that AMD has, “too much on its plate right now but
Fujitsu is a natural.”
