Replies to post #2539 on Transmeta (Semiconductor) (TMTA)

[wbmw]

Hseitz, some things to look out for.

Revenue down: that one's obvious. $7.5M in Q2 down to $6.4M for Q3, and a guidance of $5-6M for Q4. Lower units, lower ASPs, or both? And Banias isn't even here yet.

R&D down: last 4 quarters it was $16-19M, and now it's $13.7M. Transmeta is cutting in the wrong places, but it doesn't look like they have a choice. My guess is that they reduced headcount.

Cash burn: from $180M in Q2 to $156M in Q3, and forecasted to be $129M in Q4. It's a falling knife, and the trend has been there for the past 5 quarters at least. At this rate, it's not too long before it hits zero.

Accounts Receivable: why is this much higher? Does TMTA have sales that missed the quarter deadline, or do they have customers not paying them back? No good book-keeper lets this number get out of whack, so what's wrong?

Inventories: why is this much higher? It suggests that TMTA is making parts that aren't selling.

Long term debt: this has gone up. Has TMTA been taking out any new loans?

Can't be too careful. TMTA has some red flags, IMHO.

wbmw

[weaksidehelp]

hseitz, with all due respect, we are not following INTC or AMD into 4Q, but, instead, lagging behind.

This is from memory, but INTC showed a minor increase for 3Q and projects a further modest increase for 4Q. Yesterday, AMD announced a terrible 3Q, but the company projects 20% revenue growth in 4Q, QoQ. As I write this, AMD is up 22%.

My point? It really is a variation on my song from last night. If we are in such a hot spot in the chip market, and if INTC and AMD!!! are guiding increasing revenues for 4Q, why are we guiding as much as a 22% decrease in revenue? Not to mention at the same time we are confidently (brazenly??) asking the investment community to believe that 4Q03 revenues will be $50M+, a 900% QoQ increase (might want to check my math on that).

I also take issue with the "nuclear winter" analogy, at least in the realm of microprocessors. This isn't telecom. There is a market shift taking place, as desktops are becoming a mature marketplace and there is little reason for consumers to upgrade. I write this on a PII 300Mhz Gateway which is quite acceptable for my needs. This machine has a DSL feed and feels to me to be functionally much faster than my 1.5GHz Gateway at home with dialup Internet access. I do buy into the agrument that the microprocessor marketplace is moving to mobility. However, this makes my underlying question all the more urgent.

regards, wsh