Intel has patched up hurt feelings with Transmeta with a big fat check.
Share prices of Transmeta more than tripled following a ground-shaking settlement with CPU market leader Intel. Intel has just agreed to a $250 million USD settlement with Transmeta, perhaps the biggest financial event in Transmeta's rocky history.
Transmeta, founded in 1995, has had its share of ups and downs. It focuses on the design of power efficient architectures and its resume includes the Crusoe and Efficeon x86 architectures. The company at one time employed Linux legend Linus Torvalds. In the 1990s it tried to compete with Intel and AMD in the processor market, but could not become profitable and faced struggling sales.
The company made lots of headlines in October 2006, when it filed suit against Intel on infringement of ten patents. Not long after the suit was filed, Transmeta decided to do away with its engineering services departments in February 2007. This meant that Transmeta no longer would develop new hardware or software, but would exist solely to market its existing intellectual property. Despite this drastic shift, Transmeta showed signs of life when it received a $7.5 million USD cash infusion from AMD for use of its patent portfolio.
Intel countersued Transmeta in January, claiming Transmeta infringed on seven Intel patents.
Now that the pair has made up -- how exactly the massive settlement will effect Transmeta has yet to be seen. The effects on the stock were instant, though as prices per share jumped from $9.75 yesterday to $26.01 today.
In exchange for the settlement, Transmeta is getting cozy with Intel -- it will grant licenses to any of its existing patents, and any new patents it is granted over the next 10 years. It will also transfer some technology rights. Among these rights is LongRun2, a technology which reduces unwanted leakage of electrical current from chips.
Transmeta's President and Chief Executive Les Crudele was excited about the deal. "We believe that this arrangement will create value for Transmeta stockholders both by realizing immediate financial value for our intellectual-property rights and by supporting our technology development and licensing business going forward," said Crudele.
What exactly his comments on "technology development" allude to, if anything material, has yet to be seen because Transmeta currently has no real development resources.
Transmeta may have a rocky history and an uncertain future, but it has scored a major victory and has formed an unlikely relationship with a former rival.
"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson
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