Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Thursday, September 14, 2006

Investors and traders alike love to speculate on which company will provide components for which new hot appliances. If you dont think so, go back and search news releases and the foresaken message boards and chat rooms where daytraders and investors are out picking and panning names.

Shares of Cypress Semi (CY) SigmaTel (SGTL), Omnivsion (OVTI), PortalPlayer (PLAY) and many others have all had big runs up and back down several times as a result of their components being used and replaced in each new hot gadget out there.

Transmeta (TMTA) is up on active volume this morning. Let's do a little digging and you can see why. Microsoft has announced the Zune launch for later today with full details to come later today. Toshiba is the manufacturer of Zune for Microsoft, and just yesterday Toshiba announced a pact with Transmeta.

Toshiba Corporation yesterday exercised an option to expand the initial scope of Toshiba's license to Transmeta's LongRun2(TM) Technologies. In February 2006, Toshiba licensed Transmeta's LongRun2 Technologies for reducing power, controlling transistor leakage and improving the operating characteristics of semiconductor devices for use in selected application areas in the 90 nanometer through 22 nanometer CMOS process generations. Transmeta's LongRun2 Technologies provide semiconductor manufacturers and chip designers with innovative ways to reduce power consumption and reduce variations between chips. Among the many techniques developed by Transmeta is a unique new approach to controlling transistor leakage that is simpler to implement and requires less area than prior approaches. By controlling transistor leakage with LongRun2 techniques, chips can often be operated at lower power, and yield can often be improved for chips with tight power budgets. LongRun2 can help adjust leakage dynamically to provide both for the lowest standby power and for adjustment of performance and power during chip operation. In May 2006, Transmeta presented test results on a LongRun2-enabled Efficeon microprocessor at a technical symposium showing that its LongRun2 technologies were able to reduce the worst case power by 2.6x, or to increase the worst case maximum frequency at a given power by 1.6x.

So what is all this techno-speak mumbo jumbo? In short, Transmeta in this function allows small microprocessors and chips to run on lower power. Gadgets have to be super efficient or their tiny batteries will die sooner than you can blink, and the company helps in this manner. It has been a beleagured stock that has been trading in the $1.00 to $2.00 range for most of the last year. This was a $4.00 stock back at one point in 2004 and TMTA used to trade over $30.00 back in the day.

It has already traded up 14% today to $1.34 on about 3.7 million shares, and that is already more than double normal trading volume. After today's trading the stock has a $261 million market cap and the company still loses money. It is thinly followed and hasn't had a profitable year in any recent year. Traders today are hoping that this may change the field.

Jon C. Ogg
September 14, 2006

Powered by Blogger