I hate to see a good company go bad, but that seems to be exactly what's happening to Transmeta (NASDAQ:TMTA) these days.

The former semiconductor designer, now an intellectual property licensor, just reported a truly dismal quarter with $171,000 in revenue, compared with last year's $9.3 million. Also, its net loss of $8.5 million in the second quarter of 2006 widened to a net loss of $11.5 million this time.

None of these numbers accounts for AMD's (NYSE:AMD) recent $7 million investment in the company, because that cash infusion happened after the close of the quarter. Still, even including that event as a fictional net income component, this quarter was a massive cash sink.

But the worst part wasn't the numbers, as dispiriting as they may be -- it was management's comments. Most business leaders like to talk about growth plans, but Transmeta CEO Les Crudele is content to focus on "additional opportunities to finance our operations."

The company plans to reverse-split its stock sometime in the next year -- though probably sooner rather than later -- just to stay in compliance with Nasdaq listing rules. Crudele said that its first IP license customer, NEC (NASDAQ:NIPNY), is about ready to ship its first product with Transmeta-licensed technology, so the next quarter will show us more about how this company plans to stay afloat on such revenue alone.

Transmeta has become one of those dreaded patent trolls, and it's sad to see. I think the company has set itself up to be acquired by AMD through that investment deal, but the chip maker can't justify splurging on a portfolio of power-conserving patents today. It's an idea for a later date, and until then, Transmeta just has to stay alive. Somehow. At this rate, it'll be just a couple of quarters before the cash fount runs entirely dry, barring new investor moves or decent license sales.

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Fool contributor Anders Bylund is an AMD shareholder but holds no other position in any of the companies discussed here. He still remembers when Transmeta was cool, and wishes the company the best of luck. You can check out Anders' holdings if you like, and Foolish disclosure lives in a van, under the bridge, down by the river.