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CNBC.com: AMD buying Transmeta?

Jan 26, 2001, 17:17 (5 Talkback[s])
(Other stories by Maureen Tkacik)

"Five years ago this month, Advanced Micro Devices Inc. paid through the nose to acquire NexGen, a plucky but profitless little microprocessor design house that had been a hot initial public offering just months before. This year, the technology community is abuzz over whether the Sunnyvale, Calif.-based chip maker might do it again, this time with Transmeta Corp., the stealthy but self-promotional 364-employee designer of low-power microprocessors for notebook computers."

"It is a stretch. AMD, which saw its best earnings in history last year, is nowhere near as visibly desperate as it was when it put up $840 million in stock for tiny NexGen in 1995. Then, the microprocessor market's smaller players were under pressure to come up with a chip that could compete with Intel Corp.'s new, high-performance Pentium line. AMD didn't quite have one yet; NexGen did but it didn't have the manufacturing facilities to meet demand. NexGen was losing money, AMD was losing market share. The merged duo continued to lose both together for years following the marriage, but when AMD rebounded spectacularly in 2000, analysts were quick to point out that the company couldn't have done it without NexGen."

"AMD doesn't, by anyone's estimation, need highflying, cash-burning $3.2 billion market capitalization Transmeta right now, and the only confirmed deal the two have made simply involves AMD using the upstart's code-morphing software to simulate its not-yet-manufactured server chips for software development. Code-morphing is a process that shifts much of the work that a microprocessor does from hardware to software code."

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