Gemalto Reports Third Quarter 2007 Revenue



    AMSTERDAM, NETHERLANDS, November 8 /CNW/ - Regulatory News:

    --  Revenue up 6% at constant exchange rates to EUR 401 million

    --  Growth in all main segments

    --  SIM card average selling price up 4% compared with prior quarter

    --  39% revenue increase in Government Programs

    --  Encouraging development in Service activities

    --  Restructuring program in Western Europe taking place progressively

    All revenue and average selling price variations in this press release
are by reference to 2006 third quarter revenue and are stated at constant
exchange rates unless otherwise mentioned. All the figures presented in this
press release are unaudited. Revenue for the third quarter of 2006 and pro
forma revenue for the first nine months of 2006 are presented in Appendix 2.
IFRS revenue figures for the third quarter and the first nine months of 2006
are presented in Appendix 3.

    Gemalto (Euronext NL0000400653 - GTO), the world leader in digital
security, today announced its revenue for the quarter ended September 30,
2007:

    
                                                   Year-on-year change
              EUR  in millions     Q3 2007      at constant exchange rates
    ----------------------------------------------------------------------
    Mobile Communication            234.2                  +5%
    Secure Transactions(1)          100.7                  +7%
    Security(1)                      43.4                  +15%
    Public Telephony                 10.6                 (19%)
    Point-of-Sale Terminals          11.8                  +7%
    ----------------------------------------------------------------------
          Total revenue             400.6                  +6%
    ----------------------------------------------------------------------
    

    Olivier Piou, Chief Executive Officer, commented: "Revenue for the third
quarter marked the return to year-on-year growth, with a good product mix in
Mobile Communication and strong Government Programs deliveries. Secure
Transactions was affected by operational difficulties related to the
rationalization of our manufacturing footprint in Western Europe, but
nevertheless recorded strong improvements in personalization activities.
Market demand remains robust in all our main segments. In completing the year,
we will benefit from the usual favorable seasonal pattern, as well as from the
ongoing synergy realization."

    Changes in the financial reporting

    Effective July 1, 2007 the Identity & Security segment is renamed
Security in all financial reporting. This Security segment comprises
Government Programs, Identity & Access Management, and patent licensing
activities.

    To align external reporting with the new operational organization put in
place, also effective July 1, 2007, the Transport business activity is now
being reported under the Secure Transactions segment. Previously, it had been
reported as part of the Security segment. Relevant 2006 and 2007 revenue
figures reflecting this modification are detailed in Appendix 4. Transport FY
2006 and H1 2007 revenue represented approximately 1% of the Gemalto total
turnover.

    Third quarter 2007 revenue analysis

    Total revenue for the third quarter of 2007 was EUR 401 million, up by 6%
at constant exchange rates, and up by 3% at historical exchange rates.
Top-line growth was recorded in each of the main business segments.

    Segment information

    Mobile Communication

    
                                              Year-on-year change
       EUR  in millions     Q3 2007       at constant exchange rates
    ------------------------------------------------------------------
          Revenue            234.2                    +5%
    ------------------------------------------------------------------
    

    Mobile Communication reported continued improvements due to targeted
offerings and a focus on value. The segment returned to year-on-year growth on
the back of a good product mix across all geographic areas, highlighting the
market demand for higher-value offers. Software and services also recorded
continued revenue growth.

    Quarter-on-quarter, average selling price was up by 4%. The year-on-year
average selling price decrease was contained to 4% at constant exchange rates
(8% at historical rates), a very meaningful improvement when compared with the
32% drop recorded a year ago and an indication of the success of our pricing
recovery program.

    During the quarter, Gemalto recorded customer successes that leveraged
the broad installed base of SIM cards to deploy data and value-added services.
One example was the Brazilian operator Oi which partnered with Gemalto during
the Pan-American Games to deploy mobile content services including trivia
games, news alerts, downloads and e-auction, to more than 13 million of its
subscribers, encouraging more data usage.

    In October, Gemalto and Far Eastone Telecommunication announced their
partnership in Taiwan's first mobile contactless SIM-based NFC (Near Field
Communication) trial, allowing users and partner merchants to experience
mobile payment and interact with smart posters using Gemalto technology.
Taiwan's rapid adoption of contactless payment and appetite for new technology
make it an attractive market to demonstrate the potential of mobile
contactless, with a series of trials leading to possible commercial rollout
during 2008.

    Secure Transactions

    
                                              Year-on-year change
      EUR  in millions      Q3 2007       at constant exchange rates
    ------------------------------------------------------------------
         Revenue             100.7                    +7%
    ------------------------------------------------------------------
    

    Revenue in this segment was up by 7% year-on-year, driven mainly by
strong growth in personalization activities, and to a lesser extent growth in
pay TV and Transport activities.

    A comprehensive program of manufacturing restructuring initiatives is
being implemented in Western Europe. Some related production and labor
difficulties were encountered during the period which adversely affected
deliveries in this segment during the quarter.

    In addition to assisting with EMV migrations around the world, Gemalto is
supplying banks with an innovative offer that allows their customers to
customize and order new credit cards via secure access to an online design
portal. The recent adoption of Gemalto's CardLikeMe(TM) solution by SEB
Germany, a North European financial group with over 5 million customers,
highlights the completeness of Gemalto's banking solutions, from software
development through card personalization to fulfillment.

    Security

    
                                              Year-on-year change
      EUR  in millions      Q3 2007       at constant exchange rates
    ------------------------------------------------------------------
         Revenue             43.4                    +15%
    ------------------------------------------------------------------
    

    The Security segment posted a strong performance driven by growth in
Government Programs. Progress was partly offset by weakness in Identity &
Access Management (IAM). Overall segment revenue was up by 15% including
marked growth in personalization revenue.

    Government Programs reported a very substantial growth of 39% on the back
of deliveries on large volume contracts such as the US e-passport, and for the
Oman e-ID program. This increase was slightly offset by lower revenue from
e-healthcare activity due to slower activities in Western Europe.

    IAM revenue was down 19% due to lower deliveries of microprocessor
devices in the Americas and slower sales in EMEA, partially offset by initial
deliveries of online banking authentication solutions to Barclays in the UK
and shipment of secure USB tokens to customers in Asia.

    The IAM business was strengthened by the signing of a number of new VARs
(value-added reseller) and distributors. Gemalto's growing indirect sales
network greatly enhances the Company's market reach and ability to deliver
enterprise security offers such as the Microsoft Vista compatible .NET
solution.

    Similar to last year, no significant patent licensing activity was
reported in the third quarter.

    Public Telephony

    
                                              Year-on-year change
      EUR  in millions      Q3 2007       at constant exchange rates
    ------------------------------------------------------------------
         Revenue             10.6                    (19)%
    ------------------------------------------------------------------
    

    The continuing decline of the memory card market for Public Telephony is
attributable to the broader usage of mobile telephony worldwide.

    Point-of-Sale Terminals

    
                                              Year-on-year change
      EUR  in millions      Q3 2007       at constant exchange rates
    ------------------------------------------------------------------
         Revenue             11.8                     +7%
    ------------------------------------------------------------------
    

    The introduction in the fourth quarter of 2006 of a new range of products
developed on a common, highly adaptable new technology platform is proving to
be a success and has supported revenue growth in the third quarter of 2007.

    
                              Regional analysis

                       Third quarter revenue by region

        EUR  in                        Year-on-year        Year-on-year
         millions  Q3 2006 Q3 2007 change at historical change at constant
                                      exchange rates      exchange rates
    ----------------------------------------------------------------------
    EMEA             216     215           (0%)                +1%
    North & South
     America         92      106           +15%                +23%
    Asia             83      79            (4%)                +1%
    ----------------------------------------------------------------------
    Total revenue    391     401           +3%                 +6%
    ----------------------------------------------------------------------
    

    The Americas reported a 15% revenue growth at historical exchange rates,
driven by Mobile Communication and Security. Taking into consideration the
weaker US dollar relative to the Euro in 2007, revenue growth was 23% at
constant exchange rates. The Americas accounted for 26% of third quarter 2007
revenue, up two percentage points compared to the previous year.

    Outlook

    In the second half of 2007, operating margin(2) will reflect the usual
favorable seasonal pattern and the increasing contribution of our digital
security solutions deployments. It will also benefit from additional cost
synergies from the combination.

    Gemalto continues to anticipate sustained demand in all of its key
markets. It will continue to proactively make the necessary adjustments to its
cost base and remains determined to reach its stated objective of an operating
margin(2) above 10% in 2009.

    Reporting calendar

    Fourth quarter and full year 2007 revenue will be reported on January 30,
2008, prior to the opening of Euronext Paris.

    Conference call

    The Company has scheduled a conference call for today at 3:00 pm Paris
time (2:00 pm London time and

    9:00 am New York time). Callers may participate in the live conference
call by dialing:

    +44 (0) 207 806 1967 or +1 718 354 1390 or +33 1 70 99 43 03.

    The slide show will be posted on the Company's web site at noon Paris
time (11:00 am London time).

    Replays of the conference call will be available approximately 3 hours
after the conclusion of the conference call until November 14, 2007 midnight
Paris time by dialing:

    +44 (0) 207 806 1970 or +1 718 354 11 12 or +33 1 71 23 02 48 access
code: 1248231#.

    About Gemalto

    Gemalto (Euronext NL 0000400653 GTO) is the leader in digital security
with pro forma 2006 annual revenues of EUR 1.7 billion, offices in more than
85 countries and about 10,000 employees including 1,300 R&D engineers.

    In a world where the digital revolution is increasingly transforming our
lives, Gemalto's solutions are designed to make personal digital interactions
more convenient, secure and enjoyable.

    Gemalto provides end-to-end digital security solutions, from the
development of software applications through design and production of secure
personal devices such as smart cards, SIMs, e-passports, and tokens to the
deployment of managed services for its customers.

    More than a billion people worldwide use the company's products and
services for telecommunications, financial services, e-government, identity
management, multimedia content, digital rights management, IT security, mass
transit and many other applications.

    As the use of Gemalto's software and secure devices increases with the
number of people interacting in the digital and wireless world, the company is
poised to thrive over the coming years.

    Gemalto was formed in June 2006 by the combination of Axalto and Gemplus.

    For more information please visit www.gemalto.com

    This communication does not constitute an offer to purchase or exchange
or the solicitation of an offer to sell or exchange any securities of Gemalto.

    This communication contains certain statements that are neither reported
financial results nor other historical information and other statements
concerning Gemalto. These statements include financial projections and
estimates and their underlying assumptions, statements regarding plans,
objectives and expectations with respect to future operations, events,
products and services and future performance. Forward-looking statements are
generally identified by the words "expects", "anticipates", "believes",
"intends", "estimates" and similar expressions. These and other information
and statements contained in this communication constitute forward-looking
statements for purposes of applicable securities laws. Although management of
the company believes that the expectations reflected in the forward-looking
statements are reasonable, investors and security holders are cautioned that
forward-looking information and statements are subject to various risks and
uncertainties, many of which are difficult to predict and generally beyond the
control of the companies, that could cause actual results and developments to
differ materially from those expressed in, or implied or projected by, the
forward-looking information and statements, and the companies cannot guarantee
future results, levels of activity, performance or achievements. Factors that
could cause actual results to differ materially from those estimated by the
forward-looking statements contained in this communication include, but are
not limited to: the ability of the company's to integrate according to
expectations; the ability of the company to achieve the expected synergies
from the combination; trends in wireless communication and mobile commerce
markets; the company's ability to develop new technology and the effects of
competing technologies developed and expected intense competition generally in
the companies' main markets; profitability of expansion strategy; challenges
to or loss of intellectual property rights; ability to establish and maintain
strategic relationships in their major businesses; ability to develop and take
advantage of new software and services; the effect of the combination and any
future acquisitions and investments on the companies' share prices; and
changes in global, political, economic, business, competitive, market and
regulatory forces. Moreover, neither the companies nor any other person
assumes responsibility for the accuracy and completeness of such
forward-looking statements. The forward-looking statements contained in this
communication speak only as of the date of this communication and the
companies are under no duty, and do not undertake, to update any of the
forward-looking statements after this date to conform such statements to
actual results, to reflect the occurrence of anticipated results or otherwise
except as otherwise required by applicable law or regulations.

    (1) Effective July 1, 2007 Transport activity is reported under Secure
Transactions in order to align external reporting with the operational
organization put in place by Gemalto also effective July 1, 2007. This
activity had until June 30 2007 been reported under the Identity & Security
segment. Relevant 2006 and 2007 revenue figures reflecting this modification
are detailed in Appendix 4. Also effective July 1, 2007 Identity & Security is
renamed Security. The segment comprises Government Programs (previously named
Identity), Identity & Access Management (previously named Security) and patent
licensing activities. Transport revenue in 2006 and H1 2007 represented
approximately 1% of Gemalto total revenue.

    (2) Prepared on an adjusted basis, excluding one-off expenses incurred in
connection with the combination with Gemplus, reorganization charges and
charges resulting from the accounting treatment of the transaction.

    
                                  Appendix 1

         Deliveries of secure personal devices (microprocessor-based)

                                             First nine First nine
                     Q3 2006 Q3 2007   %     months of  months of    %
    In millions of                    growth    2006       2007     growth
          units                              pro forma
    ----------------------------------------------------------------------
    Mobile
     Communication     219     238     +9%      648        684       +5%
    Secure
     Transactions(3)   54      53     (2%)      158        165       +5%
    Security(3)         6       9     +44%       20         22      +14%
    ----------------------------------------------------------------------
    Total              280     301     +8%      826        871       +5%
    ----------------------------------------------------------------------
    

    
                                  Appendix 2

                  Third quarter revenue by business segment

                                              % change at    % change at
                             Q3 2006 Q3 2007   historical      constant
            EUR  in millions                 exchange rates exchange rates
    ----------------------------------------------------------------------
    Mobile Communication      230.4   234.2       +2%            +5%
    Secure Transactions(3)    96.6    100.7       +4%            +7%
    Security(3)               38.5    43.4        +13%           +15%
    Public Telephony          13.6    10.6       (22%)          (19%)
    Point-of-Sale Terminals   11.3    11.8        +4%            +7%
    ----------------------------------------------------------------------
    Total revenue             390.5   400.6       +3%            +6%
    ----------------------------------------------------------------------
    

    
                First nine months revenue by business segment

                       First nine First nine  % change at    % change at
                       months of  months of    historical      constant
                          2006       2007    exchange rates exchange rates
      EUR  in millions pro forma
    ----------------------------------------------------------------------
    Mobile
     Communication       721.1      652.0        (10%)           (6%)
    Secure
     Transactions(3)     298.0      304.3         +2%            +5%
    Security(3)          135.1      130.7         (3%)           (1%)
    Public Telephony      46.5       32.5        (30%)          (26%)
    Point-of-Sale
     Terminals            36.1       40.9         +13%           +17%
    ----------------------------------------------------------------------
    Total revenue       1 236.8    1 160.5        (6%)           (3%)
    ----------------------------------------------------------------------
    

    (3) Effective July 1, 2007 Transport activity is reported under Secure
Transactions in order to align external reporting with the operational
organization put in place by Gemalto also effective July 1, 2007. This
activity had until June 30 2007 been reported under the Identity & Security
segment. Relevant 2006 and 2007 revenue figures reflecting this modification
are detailed in Appendix 4. Also effective July 1, 2007 Identity & Security is
renamed Security. The segment comprises Government Programs (previously named
Identity), Identity & Access Management (previously named Security) and patent
licensing activities. Transport revenue in FY 2006 and H1 2007 represented
approximately 1% of Gemalto total revenue.

    
                                  Appendix 3

    IFRS FINANCIAL INFORMATION

    The combination between Gemalto and Gemplus was effective on June 2,
     2006, and Gemplus activity was fully consolidated with that of
     Gemalto as from that date. It explains the differences between the
     IFRS revenue and the pro forma revenue for the first nine months of
     2006 presented in Appendix 2.

       Third quarter and first nine months revenue by business segment

                                       First nine months First nine months
      EUR  in millions Q3 2006 Q3 2007      of 2006           of 2007
    ----------------------------------------------------------------------
    Mobile
     Communication      230.4   234.2        494.1             652.0
    Secure
     Transactions(4)    96.6    100.7        210.4             304.3
    Security(4)         38.5    43.4         91.1              130.7
    Public Telephony    13.6    10.6         26.5              32.5
    Point-of-Sale
     Terminals          11.3    11.8         36.1              40.9
    ----------------------------------------------------------------------
    Total revenue       390.5   400.6        858.2            1 160.5
    ----------------------------------------------------------------------
    

    
                                  Appendix 4

     Impact of changing the reporting segment of Transport activity from
                        Security to Secure Transactions

                    Q3 2006       Q3 2006     First nine     First nine
                    before        after        months of      months of
                    changing    changing the      2006           2006
         EUR  in      the        reporting   before change  after changing
         millions  reporting    segment of    the reporting  the reporting
                   segment of    Transport     segment of     segment of
                   Transport      activity     Transport      Transport
                    activity                    activity       activity
    ----------------------------------------------------------------------
    Secure
     Transactions     93.0         96.6          284.3          298.0
    Security          42.2         38.5          148.8          135.1
    ----------------------------------------------------------------------

                    Q3 2007       Q3 2007     First nine     First nine
                    before        after        months of      months of
                    changing    changing the      2007           2007
         EUR  in      the        reporting   before change  after changing
         millions  reporting    segment of    the reporting  the reporting
                   segment of    Transport     segment of     segment of
                   Transport      activity     Transport      Transport
                    activity                    activity       activity
    ----------------------------------------------------------------------
    Secure
     Transactions     95.7         100.7         288.5          304.3
    Security          48.4         43.4          146.5          130.7
    ----------------------------------------------------------------------
    

    (4) Effective July 1, 2007 Transport activity is reported under Secure
Transactions in order to align external reporting with the operational
organization put in place by Gemalto also effective July 1, 2007. This
activity had until June 30 2007 been reported under the Identity & Security
segment. Relevant 2006 and 2007 revenue figures reflecting this modification
are detailed in Appendix 4. Also effective July 1, 2007 Identity & Security is
renamed Security. The segment comprises Government Programs (previously named
Identity), Identity & Access Management (previously named Security) and patent
licensing activities. Transport revenue in FY 2006 and H1 2007 represented
approximately 1% of Gemalto total revenue.




For further information:

For further information: Gemalto Corporate Communication Remi CALVET,
M.: +33(0) 6 22 72 81 58 remi.calvet@gemalto.com or Corporate Media Relations
Emmanuelle SABY, M.: +33(0) 6 09 10 76 10 emmanuelle.saby@gemalto.com or
Investors Relations Stephane BISSEUIL, T.: +33(0) 1 55 01 50 97
stephane.bisseuil@gemalto.com or TBWA Corporate Emlyn Korengold, T.: +33 (0) 6
08 21 93 74 emlyn.korengold@tbwa-corporate.com

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