SAN JOSE, Calif. Troubled Transmeta Corp. is streamlining its operations to focus on its core business of developing and licensing intellectual property.
On Friday (Feb. 2), Transmeta (Santa Clara, Calif.) began the initial phase of its re-alignment by decreasing its worldwide workforce by approximately 39 percent, or 75 employees, most of whom worked in the company's engineering services business.
The company also took the initial steps to close its sales and support offices in Taiwan and Japan.
Over the next two quarters, as the company completes its existing engineering services work, it expects to further reduce its headcount by about 25 to 55 people, depending on the level of support required for the Microsoft FlexGo program.
It estimates that these actions will result in cumulative restructuring charges in the range of $11 million to $14 million, the vast majority of which will be an expense in the first quarter of 2007. The company estimates these actions will require total cash expenditures of about $7 million to $10 million, which will be incurred primarily in the first quarter.
The company expects these actions to generate cost savings in the range of $17 million to $23 million on an annualized basis.
"After a critical evaluation of all our lines of businesses, we have decided that IP development and licensing will be our core business activity going forward,'' said Lester Crudele, the new president and CEO, in a statement. ''We continue to believe that this is the best way for us to deliver our technology to the market and monetize our investments. Therefore, we have initiated a restructuring plan to re-align our headcount and expenses accordingly."