Transmeta (Semiconductor) (TMTA)

[DewDiligence]

>> Have you considered redoing your previous quarter by quarter earnings analysis, given TMTA's new numbers, just to prove that they can return to profitability? <<

I don’t fully accept the notion set forth in the CC that the lack of revenue growth in 3Q02 and 4Q02 can be made up by a steeper-than-previously-expected ramp in the second half of 2003.

In all likelihood, the slow period TMTA is going through now will mean one of two things (or a combination thereof): 1. Later achievement of profitability; or 2. Less cash in the bank at end 2003.

I one thing I do not think TMTA would consider is a highly-dilutive stock offering. As MoldyEgg and others have pointed out, there are other ways to raise capital such as credit lines and high-yield bonds. Thanks to TMTA’s lowered cash burn (excluding one-time costs related to the layoff), TMTA has some margin for error when it comes to the financial goals for 2003. By the end of 2003 or early 2004, the capital markets might well be far more hospitable than they are today.

As I said in an earlier post, TMTA has a fine balance sheet for an emerging tech company. After today’s CC, it appears that the balance sheet might be stressed a tad more than I had hoped, but I am not unduly worried.

If TMTA’s sales ramp nicely in 2003 -- if TMTA can become to INTC what JNPR has become to CSCO – TMTA investors should be well rewarded. Regards, Dew