Transmeta Warns of Steep Drop in Sales

Chip maker Transmeta Corp. cited the sluggish economy in Japan in warning that sales this quarter will be significantly lower than expected. Most of Transmeta’s business comes from Japan, where the company’s low-power Crusoe chips are used in laptop computers made by Sony Corp., Toshiba Corp. and NEC Corp.

Transmeta shares plunged to $8.01 in extended trading on the announcement, after closing off $1 at $12.60 on Nasdaq.

Revenue is expected to fall 40% to 45% from the first-quarter level of $18.6 million, the company said. That would translate into sales of $10.2 million to $11.1 million--well off the consensus Wall Street forecast of $19.6 million, according to First Call/Thomson Financial.

Shipments to major customers are being reduced, and the company will likely have to take an unspecified charge to write off excess inventory this quarter, said Chief Executive Mark Allen.