SiliconBeat

Transmeta, the Santa Clara developer of semiconductor technology, said Wednesday afternoon that it “will now explore a possible sale” of the company. The move no doubt pleased its newest board member and largest shareholder, Bryant Riley, who gave up his proxy battle with the company in return for a board seat for himself and two others he agreed on with the company. Riley, who owns 12.1 percent of Transmeta’s shares, also agreed to limit any future accumulation of them to no more than 13 percent. Read the rest of this entry »

Bryant Riley, who filed a shareholder lawsuit against Transmeta in January and said in May he intended to mount a proxy fight at the company’s next annual meeting to have himself and a cohort nominated to its board, will now be nominated to the board by the company itself, according to an agreement announced Tuesday.

Transmeta also agreed to increase its board size from seven to nine directors, and to immediately name to it J. Michael Gullard, who serves on the board of directors at Alliance Semiconductor along with Riley and Melvin Keating, whom Riley had originally nominated along with himself to the Transmeta board.

Riley also agreed to acquire no more than Read the rest of this entry »

Yahoo wasn’t the only company to receive am “unsolicited” bid last week. So did Transmeta, the chip company that received $150 million last week of a $250 million settlement owed to it by Intel.

Although we don’t know yet whether Microsoft’s bid can be classified as “hostile” yet –
Yahoo’s board has yet to accept or reject it — we can say that the offer to buy Transmeta was VERY hostile, accompanied as it was by a shareholder lawsuit accusing Transmeta’s management of “looting” the company of “tens of millions of dollars via purported “bonuses’ and stock options all the while overseeing (Transmeta’s) losing of millions of dollars of market capitalization and value.”

The antagonist is none other than Bryant Riley, the Los Angeles investor whose Riley
Investment Management (RIM) has an interest in a number of cash-rich local companies.

He was particularly aggrieved over the payment of a potential bonus to Transmeta’s general counsel of more than $10 million to reward him for his success in the litigation with Intel that led to the $250 million judgment.

On Jan. 14 RIM demanded to see company “books and records” so that it could “investigate potential wrongdoing, mismanagement, waste of corporate assets and breaches of fiduciary duties” by members of Transmeta’s board.

At a meeting of the board the next day — “To cite but one blatant example of the Board’s dismissive behavior” — Riley was given “ten minutes to participate by telephone” and was told “that his telephonic participation would be electronically recorded. More troubling, the Board did nothing to assure the company’s largest investor that his valid concerns and productive recommendations were acknowledged and would be taken into consideration,” according to a filing RIM made Jan. 31 as part of its offer to buy Transmeta for $15.50 per share.

The offer was about 20 percent above where the stock had traded the day before it was made. On Friday, Transmeta’s board “confirmed that it has become aware” of the offer and that, ” consistent with its fiduciary duties” the Board would “carefully” consider the offer — i.e., this is going to take some time.

Riley has give the company until Friday, Feb. 8 to accept the offer. The shareholder complaint remains.

Poor Transmeta (ticker:TMTA). The chip company seemed to finally catch a break last year when rival Intel coughed up $250 million to settle a legal dispute.

But Transmeta shareholders, led by Riley Investment Management, have been badgering the company to make some big changes. This little tussle got a lot more heated on Monday when RIM filed an amended 13-D with the following disclosure:

“On January 14, 2008, RIM sent a stockholder demand for books and records to the Issuer to investigate potential wrongdoing, mismanagement, waste of corporate assets and breaches of fiduciary duties by members of the Issuer’s Board of Directors and to assess the ability of the Board to impartially consider a demand for action related to the items described in the demand.”

Yikes. So what is RIM’s beef. Oh, just a few nitpicks really:

• Transmeta’s granting of 725,000 shares to four executive officers.
• The company’s decision to award Chief Executive Officer Lester Crudele and Chief Financial Officer Sujan Jain bonuses of  $1,000,000 and $200,000, respectively.
• RIM believes that the company, based on a formula it disclosed, may pay an $11 million bonus to General Counsel John Horsley for his work on the Intel settlement.

In summary:

“In light of these events leave RIM deeply concerned about the Board’s and management’s ability to prudently manage the Issuer in the best interest of its stockholders after the $250 million Intel settlement.”

Last month, chip designer Transmeta (ticker: TMTA) got a letter from one of it major shareholders requesting that it consider a variety of options, such as selling itself or de-listing its stock. The letter came from Riley Investment Management of Los Angeles which owned 5.9 percent of the stock at the time.

Well, let the piling on commence. On Tuesday, two shareholders, Mark Nelson and Dana Johnson, filed a Schedule 13-D disclosing that they had spent almost $9 million acquiring Transmeta stock, giving them 5.5 percent of all shares.

But here’s the bigger bummer for Transmeta: The pair used the filing to say they are on board with Riley’s plan: Either sell or go dark.

Maybe the folks at Transmeta can frame those letters and hang them on the wall next to the plaque they got for recently making The Motley Fool’s list of “5 Deathbed Stocks.”

This was shaping up be a real nice holiday around the Transmeta (ticker: TMTA) offices. The chip company just got a nice little chunk of cash from rival Intel for a liscensing agreement. That $150 million payment would keep any of us warm on these increasingly chilly nights.

Oh, but then they had to go and open the mail.

What’s this? A letter from Riley Investment Management of Los Angeles, filed on Monday. Says here they own 5.9 percent of our stock. Hmm, neat. Wonder what they want?

Let’s see, blah, blah, blah, boilerplate, boilerplate, “negative enterprise value,” blah, blah, blah, $150 million from Intel, and, uh-oh:

“RIM urges the Issuer to carefully review all options to enhance shareholder value.”

Gulp. Wonder that that means?

“Among these would be potentially selling the intellectual property to a company who can better leverage the costs associated with pursuing this strategy, delisting from NASDAQ and/or going “dark” to significantly reduce public company costs, and/or engaging in a significant dutch tender. Given RIM’s view that an investment in the Issuer is akin to a risk-free call on the intellectual property, RIM would discourage and view unfavorably any acquisitions.”

Delisting? Dark? Dutch tender? Ye gods. We don’t know what that last one means, but we still winced when we read it.

Looks like this won’t be the relaxing holiday weekend Transmeta had planned.