Transmeta has been hit with a second securities fraud class action suit filed on behalf of shareholders frustrated with the company's ability to ramp up clock speeds.
The suit, filed by Washington, DC legal firm the Law Office of Mark McNair, alleges Transmeta issued "false and misleading statements about its Crusoe line of microprocessors". Essentially, the suit claims, Transmeta's bosses made promises about the technology on the back of which the company's shareprice soared between 7 November 2000 - when it IPO'd - and 20 June this year - the date Transmeta failed to announce the much-anticipated 1GHz Crusoe TM5800.
Worse, Transmeta appears to have committed the clearly unforgiveable sin of being caught up in the semiconductor market slump which necessitated it issue a profit warning for its second quarter.
Behind all this was, the suit alleges, an intention on the part of Transmeta's principals to mislead shareholders by talking up the value of the company's stock.
Transmeta's stock has fallen from an IPO high-point of around $42 to just $3.11 now.
The Mark McNair suit's allegations mirror those of a suit filed a month ago by Milberg Weiss. That suit claims that 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. "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," it says, as does the new suit.
The suit defines the phrase "significant performance" to mean "comparable with AMD and Intel processors".
Transmeta's IPO prospectus promised the 1GHz Crusoe would ship January this year. Following the company's statement at the launch of its 800MHz TM5800 on 27 June, the 1GHz part is not expected to ship before January 2002, and potentially not for six months after that. ®