1001193--3/16/2006--TRANSMETA

related topics

{customer, product, revenue}

{product, market, service}

{property, intellectual, protect}

{stock, price, operating}

{acquisition, growth, future}

{operation, international, foreign}

{personnel, key, retain}

{operation, natural, condition}

{product, liability, claim}

{regulation, change, law}

{competitive, industry, competition}

{stock, price, share}

{control, financial, internal}

{financial, litigation, operation}

{provision, law, control}

{condition, economic, financial}

We might fail to operate successfully under our modified business model. We might not be able to execute on our modified business model if we lose key management or technical personnel, on whose knowledge, leadership and technical expertise we rely. We may not be able to raise any more financing, or financing may only be available on terms unfavorable to us or our stockholders. We may fail to meet the continued listing requirements of the Nasdaq Stock Market, which may cause our stock to be delisted and result in reduced liquidity of our stock, reduce the trading price of our stock, and impair our ability to raise financing. The success of our licensing business depends on maintaining and increasing our LongRun2 licensing revenue. We have limited visibility regarding when and to what extent our licensees will use our LongRun2 or other licensed technologies. Our licensing and services revenue cycle is long and unpredictable, which makes it difficult to predict future revenues, which may cause us to miss analysts estimates and may result in unexpected changes in our stock price. We have only recently entered the engineering services business, and our ability to succeed in that line of business is uncertain and subject to many risks. We could encounter a variety of technical and manufacturing problems that could delay or prevent us from satisfying customer demand for Efficeon TM8000 series microprocessors manufactured using a 90 nanometer process. Our restructuring plan has reduced our resources and ability to pursue opportunities and support customers in emerging markets for our microprocessor products. We currently derive a substantial portion of our revenue from a small number of customers and licensees, and our revenue would decline significantly if any major customer were to cancel, reduce or delay a transaction relating to our products, licenses and services. We face intense competition in the power management, engineering services and x86-compatible microprocessor markets. Many of our competitors are much larger than we are and have significantly greater resources. We may not be able to compete effectively. We may experience manufacturing difficulties that could increase the cost and reduce the supply of our products. Our lengthy and variable product sales cycles make it difficult for us to predict when and if a design win will result in volume shipments. If we fail to forecast demand for our products accurately, we could lose sales and incur inventory losses. If our customers are not able to obtain the other components necessary to build their systems, sales of our products could be delayed or cancelled. We rely on an independent foundry that has no obligation to provide us with fixed pricing or production capacity for the fabrication of our wafers, and our business will suffer if we are unable to obtain sufficient production capacity on favorable terms. Our reliance on Fujitsu to fabricate our wafers limits our ability to control the production, supply and delivery of our products. We depend on ASE to provide assembly and test services. If ASE were to cease providing services to us in a timely manner and on acceptable terms, our business would suffer. If our products are not compatible with industry standards, hardware that our customers design into their systems or that is used by end-users or software applications or operating systems for x86-compatible microprocessors, market acceptance of our products and our ability to maintain or increase our revenues would suffer. Our products may have defects that could damage our reputation, decrease market acceptance of our products, cause us to lose customers and revenue and result in liability to us. We are subject to general economic and market conditions. If we do not keep pace with technological change, our products may not be competitive and our revenue and operating results may suffer. Advances in battery design, cooling systems and power management systems could adversely affect our ability to achieve widespread market acceptance for our products and technologies. Our products and technologies may infringe the intellectual property rights of others, which may cause us to become subject to expensive litigation, cause us to incur substantial damages, require us to pay significant license fees or prevent us from selling our products. Any dispute regarding our intellectual property may require us to indemnify certain licensees or third parties, the cost of which could severely hamper our business operations and financial condition. If we are unable to protect our proprietary rights adequately, our competitors might gain access to our technology and we might not compete successfully in our markets. The evolution of our business could place significant strain on our management systems, infrastructure and other resources, and our business may not succeed if we fail to manage it effectively. We have significant international operations, which exposes us to risk and uncertainties. Our operating results are difficult to predict and fluctuate significantly. A failure to meet the expectations of securities analysts or investors could result in a substantial decline in our stock price. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States. We might experience payment disputes for amounts owed to us under our LongRun2 licensing agreements, and this may harm our results of operations. The price of our common stock has been volatile and is subject to wide fluctuations. Our California facilities and the facilities of third parties upon which we rely to provide us critical services are located in regions that are subject to earthquakes and other natural disasters. Our certificate of incorporation and bylaws, stockholder rights plan and Delaware law contain provisions that could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders. We may identify material weaknesses in our internal control over financial reporting.

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1001193--3/16/2006--TRANSMETA_CORP