Shares of Transmeta nearly quadrupled in value after the company said it reached an agreement with Intel, on a patent lawsuit, to settle all claims between them and license the Transmeta patent portfolio to Intel.
Under the terms, Intel will make an initial $150 million payment to Transmeta, which licenses computing, microprocessor and semiconductor technologies.
Santa Clara, Calif.-based Transmeta will also receive an annual license fee of $20 million from Intel for each of the next five years.
"The settlement will not affect third-quarter results. The first payment will not be received till the fourth quarter, or prospectively in January," John Horsley, Transmeta's general counsel and secretary said by phone.
The agreement grants Intel a perpetual nonexclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta during the next 10 years.
Transmeta sued Intel in October 2006 claiming that Intel infringed 10 of its patents covering computer architecture and power-efficiency technologies.
Intel denied the allegations and hit back in January with a counterclaim that Transmeta had infringed seven of Intel's patents.
The legal problems compounded the financial woes of the company, which has posted a loss for the last three quarters and has seen its stock shed about 81 percent of its value year-to-date before Wednesday's recovery.
Transmeta, which went public in 2000, was a much hyped chipmaker and saw its shares rise to as much as $1,017.50 on December 30, 2000.
The past year has seen the company attempting to make several changes to address its liquidity and capital resource needs.
It has streamlined its operations by
Transmeta has wound down its engineering services, ceased its operations relating to microprocessor production support, and exited the business of selling microprocessor products.
The company has licensed its LongRun2 Technologies to NEC, Fujitsu, Sony and Toshiba.
Transmeta's Horsley declined to specify if the company has started to receive royalty from these licenses.
In July, microprocessor maker Advanced Micro Devices bought a $7.5 million stake in Transmeta.
Transmeta shares were up 233 percent at $13.93 at the close of Wednesday trading. The shares touched a high of $15.70 earlier in the session.
