Updated at 10:45 p.m. PST with additional information about Intellectual Ventures
Intellectual Ventures has acquired the patent portfolio of Transmeta, an erstwhile supplier of low-power Intel-compatible x86 processors.
Intellectual Venture Funding, an affiliate of Intellectual Ventures, has picked up 140 U.S. patents and additional pending patent applications owned by Transmeta, which was acquired by privately held Novafora in November of last year.
The Transmeta technology will be used "through two distinct routes," according to an Intellectual Ventures' statement. Novafora will improve its own proprietary designs by using some of the technologies invented by Transmeta. And Intellectual Ventures will provide other companies with access to Transmeta's former patent rights under non-exclusive licensing terms.
The portfolio contains many patents issued in the last few years and has generated, in total, approximately $300 million in revenue, the firm said.
Transmeta's claim to fame as a low-power x86-compatible chip supplier was transitory, and in 2007, about seven years after the company formed, it restructured and ceased being a chipmaker. It reorganized as a Rambus-like IP (intellectual property) company that sues other companies for patent infringement. Transmeta's technology is centered on "code morphing" techniques and very long instruction word (VLIW) design architecture.
"These (patent) additions cover inventions in high-performance, low-power, and embedded processors," Paul Reidy, vice president of semiconductor licensing at Intellectual Ventures, said in a statement.
Intellectual Ventures was founded by Nathan Myhrvold after he retired from his position as chief strategist and chief technology officer of Microsoft.
Transmeta's chips are on the block. The former supplier of low-power Intel-compatible processors said Wednesday that it is actively seeking a buyer, and also announced two agreements with Intel.
The Santa Clara, Calif.-based company, which has remade itself into a supplier of chip-related intellectual property, said that after exploring a range of "strategic alternatives" over the past few months and after strengthening its balance sheet, it will seek a sale as a way to "enhance value for all its stockholders."
Transmeta is working with financial adviser Piper Jaffray.
Back in February, Transmeta weighed an unsolicited offer from Riley Investment Management, which the company ultimately rejected. At that time, Riley claimed Transmeta had an unconvincing business strategy based on its LongRun2 technology--described by Transmeta as a suite of technologies for advanced power management and "leakage control." Riley claimed at the time that there was no "credible evidence" that shareholders would benefit from the LongRun2-related operating expenses.
Transmeta also announced Wednesday that it had entered into two agreements with Intel relating to the licensing of Transmeta technologies and intellectual property. The first agreement is a fully paid-up, nonexclusive technology licensing agreement that provides for the company to deliver "proprietary Transmeta computing technologies" to Intel and grants to Intel a nonexclusive license to use them.
The second agreement is an amendment to a previously announced settlement that Transmeta and Intel entered into on December 31, 2007, which granted Intel a perpetual nonexclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta before December 31, 2017.
That settlement provided for Intel to make five annual future payments to Transmeta of $20 million per year for each year from 2009 through 2013. "This amendment accelerates Intel's remaining future payment obligations under the settlement agreement," Transmeta said.
As a result, Transmeta expects to receive cash payments from Intel totaling $91.5 million before the end of Transmeta's current fiscal quarter ending September 30, the company said.
Update at 10:40 a.m. with background about why Nvidia licensed Transmeta's technology
(Credit:
Transmeta)
Transmeta has licensed its LongRun and low-power chip technologies to graphics chip giant Nvidia for a one-time fee of $25 million. Nvidia is hoping tackle power consumption issues that dog its high-performance chips.
Transmeta, an erstwhile chip vendor turned intellectual property supplier, said Nvidia was granted a nonexclusive license to Transmeta's Long Run and LongRun2 technologies "and other intellectual property for use in connection with Nvidia products."
The agreement grants to Nvidia a license to all of Transmeta's patents and patent applications and covers "advanced power management and other computing technologies," according to a statement from Transmeta.
LongRun2 technology is a suite of advanced power management and leakage control technologies.
Nvidia has always emphasized performance over power efficiency: its chips are fast but power hungry. Nvidia needs Transmeta's low-power technologies to better meet the requirements of the laptop and handheld markets, Nvidia spokesperson Derek Perez said.
"(Transmeta's) LongRun technologies for advanced power management and transistor leakage control have shown proven value in the market," Perez said. "You'll see us leverage this technology to improve the power/performance metrics of our GPUs moving forward."
Recently Nvidia has been grappling with overheating problems in laptops that use its graphics processors. On July 2, Nvidia released a "Business Update" that addressed a defect centered on "weak die/packaging material" in certain versions of Nvidia graphics silicon used in laptops. The die refers to the chip itself and the packaging is what encases the chip.
After this announcement, both Hewlett-Packard and Dell published lists of laptops that were affected by the flaw.
Transmeta, formerly a supplier of low-power x86 processors, now develops and licenses microprocessor technologies and related intellectual property. The company filed a lawsuit against Intel in October 2006 alleging that the latter infringed upon Transmeta's patents. Transmeta later settled with Intel for $250 million.
Transmeta is presently focused on developing and licensing advanced power management technologies and licensing its computing and microprocessor technologies to other companies.
Microprocessor technology supplier Transmeta said it has received the initial payment of $150 million from Intel toward the $250 million settlement that the two companies agreed upon back in October. The payment was received on January 28, according to Sujan Jain, Transmeta's chief financial officer. Mr. Jain also said that Transmeta is evolving its business model to generate a more constant revenue stream.
Transmeta LongRun2
(Credit: Transmeta Corp.)Transmeta, previously a supplier of low-power x86 processors, now develops and licenses microprocessor technologies and related intellectual property. The company filed a lawsuit against Intel in October 2006 alleging that the latter infringed upon Transmeta's patents. Transmeta later settled with Intel for $250 million.
Last week, the company came under attack from one of its largest stockholders, Riley Investment Management, for what Riley claims is an unconvincing business strategy based on Transmeta's LongRun2 technology--described by Transmeta as a suite of technologies for advanced power management and "leakage control." Riley claims that there is no "credible evidence" that shareholders will benefit from the LongRun2-related operating expenses.
But Transmeta says it is making headway with LongRun2. Using this technology, NEC announced in July 2007 that it is targeting production of approximately one million mobile phone chips a month by 2008. As a result, Transmeta expects approximately $215,000 in LongRun2 royalty revenue that will show up in its first-quarter earnings, said Mr. Jain. That would be an improvement over its third-quarter earnings when Transmeta posted only $44,000 in revenue, including $43,000 of services revenue and $1,000 of license revenue for royalty payments.
Mr. Jain also said that Transmeta has been evolving its business model. Previously, Transmeta only dealt with big companies that had plenty of engineering know-how, due to the complexity of the technology transfer. But now it is focusing on building IP (intellectual property) modules to license to smaller, fabless chip companies too. The new strategy will help expand the LongRun2 business and should result in "more consistent revenues over time," Mr. Jain said.
Transmeta will provide details on how and when it will recognize the entire $250 million settlement from Intel during its 2007 fourth-quarter earnings conference call, said Mr. Jain.
Transmeta, the erstwhile x86 chip competitor, is coming under attack from shareholders.
Transmeta's Crusoe processor once powered NEC, Sony subnotebooks.
(Credit: Transmeta)The fact that the company posted revenue of only $44,000 in the third quarter, "which included $43,000 of services revenue and $1,000 of license revenue for royalty payments" may or may not have anything to do with Friday's proposed buyout by Riley Investment Management, which owns over 6 percent of Transmeta shares.
The investment firm does have serious questions about the business model based on the LongRun2 technology--described by Transmeta as a suite of technologies for advanced power management and "leakage control" in processors, among other technologies.
Riley complains that there is no "credible evidence" that shareholders will benefit from the LongRun2-related operating expenses. In an EETimes.com article, Riley also rails against an "illegal and unconscionable bonus of over $10 million" paid to Transmeta's general counsel, "simply for doing his job and settling an intellectual property lawsuit against Intel 10 months after it was filed" and claims that grants to top executives were given "at great cost to the shareholders with no commensurate value creation."
A little history: Transmeta, founded in 1995, ultimately failed in its bid to build better low-power x86 processors than Intel after consistently posting large annual losses. Not able to compete as a chip supplier, Transmeta in 2005 transformed itself into a supplier of x86 intellectual property.
After this transition, Transmeta filed a lawsuit against Intel alleging that the latter infringed upon 10 of Transmeta's patents, including computer architecture and power efficiency technologies. In October, Transmeta settled with Intel for $250 million. But this is a one-time payment and doesn't change the fact that Transmeta has exhibited unreliable earnings, particularly compared with a company like ARM Holdings--with 10 billion ARM design-based chips shipped to date and revenue of $384 million in the third quarter.
Transmeta's meager Q3 revenue juxtaposed with the handsome payouts to executives is, indeed, a cause for concern.
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