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Transmeta sued over Crusoe performance claims

It can't do what you said it could, class action alleges

Transmeta has been hit with a class action lawsuit that claims its chips don't perform as promised, that it knew as much and hid the fact from potential investors when it IPO'd eight months ago.

The suit was launched by law firm Milberg Weiss and claims that Transmeta's Crusoe can't offer high performance and low power consumption at the same time, contrary to what the chip designer was saying before its IPO.

Says the suit: "Unbeknownst to shareholders, at the time of the IPO, Transmeta's Crusoe chips could not deliver both longer battery life and high performance. Rather, significant performance attributes were being sacrificed in order to gain longer battery life."

Of course, the accuracy of that claim depends entirely on what you mean by "significant performance". The suit essentially defines the phrase to mean 'comparable with AMD and Intel processors'.

A fair distinction, perhaps, and there's certainly a case to answer. Transmeta's IPO promised the company would ship a 1GHz Crusoe by now, and had it done so it would indeed be offering comparable performance to current AMD and Intel mobile CPUs. Well, comparable clock speed - which isn't the same thing as performance, as any fule kno.

Interestingly, the suit was filed on the day Transmeta launched its new TM5800 chip, which will run at up to 800MHz, and not 1GHz as had been expected, not least because of comments Transmeta's CTO, Dave Ditzel, made in Japan recently.

To be fair, Ditzel didn't say the 5800 would debut at 1GHz, but he certainly said the company had the chip running at that speed. That statement plus the fact that the 1GHz part has been expected 'any day now' since January - the date when the IPO prospectus claimed it would launch - made everyone think it would arrive this week. No wonder, then, that some folk became rather pissed off when it didn't.

The 1GHz part is now not scheduled to ship for another year - Transmeta will only say that it's expected in the first half of 2002.

And then there was Transmeta's warning t'other week that its second quarter will see sales fall 40-45 per cent on the previous quarter. That's probably as much a result of the slump in the global chip market as anything Transmeta has done - or not done - but you can see why some shareholders might take offence.

Transmeta will, we imagine, have protected itself against such ire with the usual Forward-looking Statements clause in its prospectus. It certainly says the lawsuit is without merit and that it will defend itself vigorously, blah, blah, blah. ®

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