Transmeta Corp (TMTA)

metoo105 (99.70) Submitted: 8/07/08 8:38 PM : Start Price: $14.98 TMTA Score: 30.13

Like nearly all of my selections, this is an old school value play.

Today, TMTA announce a $25 licensing deal with NVDA. Add this amount to a cash hoard nearly equal to its float.

I believe Bryan Riley now controls about 15% of this company. His desire, no doubt, is to shut down the ongoing operations and expenses, continue to license the existing low power chip technology, and then to distribute the cash to shareholders. This was the strategy he took with ALSC -- Alliance Semi -- which is still winding down, but has been distributing its cash to shareholders. (ALSC is currently its own deep value play due to some wickedly confusing ARS issues.)

Mind you, it took a proxy fight. I look to see the same thing occur here however. Management can go down gently or they can go down kicking and screaming.

I haven't dug deep at all thoughl, but since the company trades at around its cash position, it's not hard to see that if you could cut the spending, all of the future licensing income would be gratis. I'd say on the basis of this quick glance that it's probable pretty close to a $0.50 dollar.

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