Intel: "Lets just buy them out next quarter, all in favor? Ok."
Intel Corp. and Transmeta Corp. on Wednesday said that the two companies had agreed to settle the patent infringement lawsuit. Under the terms of the agreement Transmeta will receive a one-time payment that equals its revenue for the recent three years and consequently will obtain the amount of cash that equals its revenue throughout the whole history of the company. Intel will receive rights to use technologies by Transmeta.
The agreement will grant Intel a perpetual non-exclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta, now existing or as may be filed during the next ten years. Transmeta will also transfer technology and grant to Intel a non-exclusive license to Transmeta’s LongRun and LongRun2 technologies and future improvements. Under the agreement, Intel will covenant not to sue Transmeta for the development and licensing to third parties of Transmeta’s LongRun and LongRun2 technologies.
The agreement provides for Intel to make an initial $150 million payment to Transmeta as well as to pay Transmeta an annual license fee of $20 million for each of the next five years. In total, Transmeta will receive $250 million from Intel, an unprecedented sum for the company, which combined revenue since 1999 was $249.133 million. In the last three years total earnings of Transmeta were $150.725 million.
The agreement also provides for the parties to dismiss their pending patent litigation with prejudice and for a mutual general release of all claims of any type between the parties.
“We are very pleased to have reached this agreement with Intel. We believe that this arrangement will create value for Transmeta stockholders both by realizing immediate financial value for our intellectual property rights and by supporting our technology development and licensing business going forward,” said Les Crudele, president and chief executive of Transmeta.
Intel’s payments will not only give stockholders of Transmeta a chance to return their investments, but will provide the struggling former chip designer with profits that it needs to survive going forward.