Riley Investment Discloses 5.9% Stake in Transmeta (TMTA), Wants Co To Review Options

In a 13D filing after the close Monday on Transmeta Corporation (Nasdaq: TMTA), Riley Investment Partners disclosed a 5.9% stake in the company, noting the the stock is undervalued.

Riley Investment believes the public market valuation reflects a negative enterprise value despite strong prospects for positive free cash flow in 2008 and the five years for which it will be paid license fees under its recent agreement with Intel.

The firm said, under its calculations, after receipt of Intel's first $150 million payment, Transmeta will have close to $180 million in cash on its balance sheet. This represents over $13 per share. Shares of Transmeta currently trade at $12.

Riley wants the company to review options to enhance shareholder. Riley suggested 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.