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Chip-Designer Transmeta Up For Sale

In essence, Transmeta's technology was instrumental in helping the industry reach a level of power efficiency that has become the foundation of so-called "green IT" initiative today.
Transmeta, the onetime promising chipmaker that was once believed to have a shot at becoming a serious challenger to Intel, is up for sale.

The Silicon Valley company, which currently makes its money from licensing intellectual property, has hired financial services firm Piper Jaffray to seek a buyer. In addition, Transmeta said Intel has agreed to an early settlement of a patent-infringement suit, and would pay Transmeta $91.5 million this month. Receiving the money would allow "potential buyers to more accurately evaluate our company," said Les Crudele, president and chief executive of Transmeta.

Transmeta, which launched its microprocessor line Crusoe in 2000, drew lots of media attention as a promising startup focused on delivering low-power microprocessors for notebooks and smaller computing devices. Such processors have become a major business today for Intel and rival Advanced Micro Devices, which have benefited from Transmeta's intellectual property. In essence, Transmeta's technology was instrumental in helping the industry reach a level of power efficiency that has become the foundation of so-called "green IT" initiative today.

Transmeta, however, was never able to build a viable business as a chipmaker, and in 2005 exited the business to focus solely on licensing its IP. Licensees of Transmeta technology today include Intel, Sony, NEC, Toshiba, Fujitsu, Nvidia, AMD, and IBM. Crudele said the company would collect at least $265 million this year in licensing revenue.

"We expect that our intellectual property portfolio and licensing business, combined with our solid balance sheet, will be attractive to potential bidders, and we look forward to conducting a timely process to maximize value for our stockholders," Crudele said in a statement released Wednesday.

Intel in October 2007 agreed to pay Transmeta $250 million to settle a patent-infringement suit. The chipmaker agreed to pay $150 million up front and an annual $20 million license fee for the next five years. In agreeing to the latest deal, Intel has decided to pay the annual fee up front.

Among the investors in Transmeta is AMD, which paid $7.5 million for a piece of the company in July 2007. AMD at the time said it would collaborate with Transmeta on creating advanced computing technologies.