Gemalto Reports Third Quarter 2006 Revenue[1]

Geschrieben am 26-10-2006

Amsterdam (ots/PRNewswire) -

- Third Quarter Revenue at EUR 390 Million, Down 8% at Constant
Exchange Rates, as Market Environment Remains Difficult in Mobile

- Year-to-date Pro Forma Revenue at EUR1,237 Million, 1% Lower
Than Last Year at Constant Exchange Rates, and Stable at Current
Exchange Rates

- Deployments of Electronic Passports Projects Lead to 20% Growth
in ID & Security in the Third Quarter 2006 at Constant Exchange

- Strong Improvement in Net Cash, up EUR42 Million, to EUR385

- Integration Program and Synergy Generation Well On-Track

Gemalto (Euronext NL0000400653 - GTO), a leader in digital
security, today announced its revenue for the quarter ended
September 30, 2006.

In millions Q3 06 Year-on- Year-on- YTD 06 Year-on- Year-on
of euros year year Pro year year
change at change at forma change at change at
historical constant historical constant
exchange exchange exchange exchange
rates rates rates rates
Mobile 230.4 -14 % -12% 721.2 -8% -9%
Secure 93.0 -5 % -4% 284.3 +8% +8%
ID & Security 42.2 +19% +20% 148.8 +56% +55%
Public 13.6 -24% -21% 46.5 -11% -12%
Point of 11.3 -31% -29% 36.1 -21% -21%
Total revenue 390.5 -10% -8% 1,236.9 0% -1%

Olivier Piou, Chief Executive Officer, commented: "Market demand
for Gemalto products and services remained strong in our major
business segments. However, price pressure particularly in Mobile
Communication eliminated revenue growth for the quarter and year to
date. We continue to see significant strength in our ID & Security
segment, which turned in another strong quarter and secured several
new e--passport projects.

Our merger integration program is moving ahead, on target and on
schedule. The integration process has validated the net synergies we
anticipated at the outset, and revealed additional opportunities that
we are implementing. The markets we serve are dynamic and we are
fully committed to making the adjustments needed to ensure that we
remain in line with our long-term objectives."

Third quarter 2006 and year-to-date pro forma revenue impacted
by a difficult market environment in Mobile Communication

Microprocessor card deliveries[2] grew 31% to 281 million units in
the third quarter 2006, sustained by strong demand in all core
business segments. Year-to-date, deliveries were up 34% to 826
million units.

Third quarter total revenue was down 8%, at constant exchange
rates, reflecting varying performance between business segments.
Strong growth in Identity & Security was offset by lower revenue in
Mobile Communication, a remnant of strong average selling price
decrease in the first quarter.

On a pro forma basis, year-to-date revenue was stable. After
adjusting for the Setec acquisition, revenue was down 3% year-to-date
at constant exchange rates.

Third quarter 2006 segment analysis

Mobile Communication performance reflects the strong ASP decline
incurred earlier in the year and a shift in geographical mix

In millions of 2005 2006 Year-on-year change Year-on-year change
euros Pro Pro at historical at constant
forma forma exchange rates exchange rates
Third quarter 267.8 230.4 -14% -12%
Year-to-date 784.7 721.2 - 8% -9%

Strong unit volume growth in SIM cards did not offset the
effect of the decrease in the average selling price:

- Deliveries for the third quarter 2006 were up 34% year-on-year
to 219 million units, driven by strong demand in Asia and in EMEA[3],
notably in Eastern Europe, the Middle East and Africa. Lower sales in
the Americas reflect a slowdown in new subscriber additions as well
as price competition.

- Average selling price for the third quarter 2006 was down 32%
year on year, at constant exchange rates, mainly due to the strong
competitive price pressure during the first quarter and a shift in
the geographic mix. Compared with the second quarter 2006, average
selling price was down 3.9%, at constant exchange rates.

In the quarter, Gemalto's digital security leadership and high end
application expertise were rewarded:

- The Group was selected to supply high-end products, consulting
services and project management for two nationwide mobile TV

- The Company Over-The-Air personal information and phonebook
synchronization applications continued to receive strong interest
from network operators and are generating new value-added services
revenue in the Americas.

Secure Transactions posted a slight decline due to slower EMV[4]
revenue in Europe

In millions of 2005 2006 Year-on-year Year-on-year
euros Pro forma Pro forma change at change at
historical constant
exchange rates exchange rates
Third quarter 97.9 93.0 -5% -4%
Year-to-date 262.3 284.3 +8% +8%

Microprocessor card deliveries for the third quarter 2006 were up
11% to 52 million units, driven by on-going EMV deployment,
particularly in Turkey, Latin America and North Asia. Volumes were
slightly down in EMEA reflecting completion of the initial EMV
migration in the United Kingdom and delays in EMV rollouts in
Southern Europe. Revenue was also impacted by price pressure in
mature markets.

Contactless payment activity has now moved beyond the United
States to Asia, where Gemalto achieved strong recognition and growth.
The Group is also supplying technology for several pilot projects in
Asia and in Europe.

Excellent performance in ID & Security

In millions of 2005 2006 Year-on-year Year-on-year
euros Pro forma Pro forma change at change at
historical constant
exchange rates exchange rates
Third quarter 35.6 42.2 +19% +20%
Year-to-date 95.2 148.8 +56% +55%

Revenue growth was driven by deliveries of e-passports solutions,
including initial deployments of large scale programs in France and

Gemalto received initial orders in the third quarter for
e-passports solutions from the USA, Poland and Slovenia, adding
several meaningful and highly visible contracts to those awarded
earlier this year in France, the Czech Republic, Portugal and Russia.

Gemalto technology was also selected in the second phase of the
Sultanate of Oman e-government program. Gemalto will provide an
update of the Registration System, integration services, and 2.5
million high-end smart ID cards to offer additional e-government
services to the population of the Sultanate.

Point-of-Sale Terminals

Slower activity in this segment reflects delays earlier this year
in tender awards in Asia a transition to a new range of products
scheduled for introduction later in the fourth quarter 2006.

Regional analysis

Third quarter revenue by region

In millions of Q3 05 Q3 06 % change at % change at
euros Pro forma historical constant
exchange rates exchange rates
EMEA 227.4 215.6 -5% -4%
North & South 128.3 92.3 -28% -26%
Asia 79.7 82.6 +4% +8%
Total revenue 435.4 390.5 -10% -8%

Regional analysis shows a substantial shift in revenue
contribution by region: Asia accounted for 21% of third quarter 2006
revenue compared with 18% a year ago. Revenue growth in this area was
driven by Secure Transactions and Mobile Communication. In EMEA,
remarkable growth in ID & Security was offset by lower revenue in
Mobile Communication and Secure Transactions. The Americas sharply
lower contribution to total revenue reflects the much lower market
demand for Mobile Communication products, while Secure Transactions
recorded strong growth over last year in Latin America, building
solid positions around the EMV deployments.


The third quarter market environment proved challenging, and the
Company expects an improvement in the fourth quarter. With synergies
from the combination materializing progressively, in line with plans,
and the significant resources required this year to converge product
roadmaps and processes, Gemalto continues to expect operating margin
in the second half 2006 to be similar to that of the first half.

The Group is confident in its ability to play a leading role in
the global development of digital security. It has taken cost
reduction measures beyond the initially identified synergies, and
continues to adapt to match the changing needs of the marketplace.
Management is determined to ensure that Gemalto meets its long term
objective of an operating margin in the low teens in 2009.

Conference call

The company has scheduled a conference call for Thursday, October
26, 2006 at 2:30 pm CET (1:30 pm BST and 8:30 am New-York time).
Callers may participate in the live conference call by dialling:

+44(0)207-365-1836 or +1-718-354-1158 or +33-1-70-99-42-72.

The slide show will be available on the web site at 12:00 CET
(11:00 BST).

Replays of the conference call will be available approximately 3
hours after the conclusion of the conference call until November 2,
2006 midnight by dialling:

+44(0)207-806-1970 or +1-718-354-11-12 or +33-1-71-23-02-48,
access code: 2104153.

Earnings calendar

Full year 2006 revenue is scheduled to be reported on February 1,
2007, before the opening of Euronext Paris.

The schedule for the announcement of fiscal year 2006 results
will be communicated on February 1, 2007.

Corporate Media Relations Corporate Communication
Emmanuelle SABY Remi CALVET
M.: +33(0)6-09-10-76-10 M.: +33(0)6-22-72-81-58
emmanuelle.saby@gemalto.com remi.calvet@gemalto.com
Investors Relations FINEO
T.: +33(0)1-55-01-50-97 T.: +33(0)1-56-33-32-31

About Gemalto

Gemalto (Euronext NL 0000400653 GTO) is a leader in digital
security with pro forma 2005 annual revenues of $2.2 billion (EUR1.7
billion), operations in 120 countries and 11,000 employees including
1,500 R&D engineers. The company's solutions make personal digital
interactions secure and easy in a world where everything of value -
from money to identities - is represented as information communicated
over networks.

Gemalto thrives on creating and deploying secure platforms,
portable and secure forms of software in highly personal objects like
smart cards, SIMs, e-passports, readers and tokens. More than a
billion people worldwide use the company's products and services for
telecommunications, banking, e-government, identity management,
multimedia digital right management, IT security and other
applications. Gemalto was formed in June 2006 by the combination of
Axalto and Gemplus.

For more information please visit www.gemalto.com


Revenue breakdown by business segment

In millions of Q3 05 As a % Q3 06 As a % YTD 05 As a % YTD 06 As a %
euros of of of of
Pro total total Pro forma total Pro total
forma forma
Mobile 267.8 62% 230.4 59% 784.7 63% 721.2 58%
Secure 97.9 22% 93.0 24% 262.3 21% 284.3 23%
ID & Security 35.6 8% 42.2 11% 95.2 8% 148.8 12%
Public Telephony 17.8 4% 13.6 3% 52.1 4% 46.5 4%
Point of Sales 16.3 4% 11.3 3% 45.8 4% 36.1 3%
Total revenue 435.4 100.0% 390.5 100.0% 1,240.1 100.0% 1,236.9 100.0%

First quarter revenue by business segment

In millions of Q1 05 Q1 06 % change at % change at
euros Pro forma Pro forma historical constant
exchange rates exchange rates
Mobile 236.7 229.9 -3% -8%
Secure transactions 71.9 91.4 +27% +25%
ID & Security 22.6 53.2 +135% +127%
Public Telephony 17.8 17.9 +1% -4%
Point of Sales 15.7 13.8 -12% -14%
Total revenue 364.7 406.2 +11% +7%

Second quarter revenue by business segment

In millions of Q2 05 Q2 06 % change at % change at
euros Pro forma Pro forma historical constant
exchange rates exchange rates
Mobile 280.3 260.8 -7% -8%
Secure transactions 92.5 99.9 +8% +7%
ID & Security 36.9 53.4 +45% +44%
Public Telephony 16.5 15.0 -9% -11%
Point of Sales 13.9 11.0 -20% -21%
Total revenue 440.0 440.1 0% -1%

Year-to-date revenue by region

In millions of YTD 05 YTD 06 % change at % change at
euros Pro forma Pro forma historical constant
exchange rates exchange rates
EMEA 651.7 665.0 +2% +2%
North & South 340.1 304.3 -11% -13%
Asia 248.2 267.6 +8% +6%
Total revenue 1,240.1 1,236.9 0% -1%

In the first half 2006 earnings release, the Company presented
additional financial information on an adjusted pro forma basis which
was prepared in US dollars. The adjusted pro forma information of the
corresponding periods have been prepared assuming that the
combination with Gemplus had taken place as of January 1, 2005, and
excluding charges arising from the accounting treatment of the
transaction and one-off expenses incurred in connection with the
combination with Gemplus. This adjusted pro forma information is
presented below in euros for the six month periods ended June 30,
2005, June 30, 2006 and December 31, 2005.

For a more detailed description of the basis of preparation of
this adjusted pro forma information, please refer to EXPLANATION OF
ADJUSTED AND PRO FORMA MEASURES at the end of the first half 2006
earnings press release.

Gemalto adjusted* pro forma income statement
(assuming the combination was executed on January 1, 2005)
All amounts in euro thousands (except where otherwise stated)
Six months ended
30-Jun-05 31-Dec-05 30-Jun-06
Sales 804,750 919,659 846,312
Cost of sales (541,434) (623,593) (590,343)
Gross profit 263,316 296,066 255,969
Gross margin 32.7% 32.2% 30.2%
Operating expenses:
Research and engineering (55,763) (60,760) (59,388)
Sales and marketing (97,767) (109,545) (108,469)
General and administrative (52,273) (62,108) (57,183)
Other income, net 2,214 1,397 (128)
Operating income 59,728 65,051 30,801
Operating margin 7.4% 7.1% 3.6%
Financial income (expenses), net 2,069 2,535 5,720
Share of profit (losses) of
associates (990) 1,426 271
Profit before income tax 60,806 69,012 36,792
Income tax expense (10,928) 14,024 (2,408)
Profit for the period 49,879 83,035 34,385
Attributable :
Equity holders of the company 31,586 46,935 16,399
Minority interest 18,292 36,100 17,986
Basic earnings per share
(in euros) 0.51 0.75 0.26
In thousands:
Basic average number of shares
outstanding 62,425 62,316 62,399

* excluding one-off expenses incurred in connection with the
combination with Gemplus and charges resulting from the accounting
treatment of the transaction


The Gemalto N.V. securities referred to herein issued in
connection with the exchange offer of Gemalto N.V. for the securities
of Gemplus International S.A., and the Gemalto N.V. shares issued in
connection with the reopening of such exchange offer, have not been
(and are not intended to be) registered under the United States
Securities Act of 1933, as amended, (the "Securities Act") and may
not be offered or sold, directly or indirectly, into the United
States except pursuant to an applicable exemption. The Gemalto
securities have been and will be made available within the United
States in connection with the exchange offer pursuant to an exemption
from the registration requirements of the Securities Act.

The exchange offer and its reopening relate to the securities of a
non-US company and are subject to disclosure requirements of a
foreign country that are different from those of the United States.
Financial statements presented have been prepared in accordance with
foreign accounting standards that may not be comparable to the
financial statements of United States companies.

It may be difficult for an investor to enforce its rights and any
claim it may have arising under U.S. federal securities laws, since
Gemalto N.V. and Gemplus International S.A. have their corporate
headquarters outside of the United States, and some or all of their
officers and directors may be residents of foreign countries. An
investor may not be able to sue a foreign company or its officers or
directors in a foreign court for violations of the U.S. securities
laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court's judgment.

This release does not constitute an offer to purchase or exchange
or the solicitation of an offer to sell or exchange any securities of
Gemalto N.V. or an offer to sell or exchange or the solicitation of
an offer to buy or exchange any securities of Gemplus International

Gemplus security holders are strongly advised to read the offering
circular relating to the exchange offer and related exchange offer
materials regarding the transaction (see below), as well as any
amendments and supplements to those documents because they contain
important information.

The exchange offer and its reopening described herein are not (and
are note intended to be) made, directly or indirectly, in or into the
United Kingdom, Italy, the Netherlands, Canada or Japan or in or into
any other jurisdiction in which such offer would be unlawful prior to
the registration or qualification under the laws of such
jurisdiction. Accordingly, persons who come into possession of this
release should inform themselves of and observe these restrictions.

Copies of the free English translation of the joint French
language offering document which has received visa No. 06-252 of July
6, 2006 from the French Autorite des marches financiers and of the
documents incorporated by reference thereto are available from the
Internet websites of Gemalto N.V. (www.gemalto.com) and of Gemplus
International S.A. (www.gemplus.com) as well as free of charge upon
request to the following: Gemalto N.V.: Koningsgracht Gebouw 1, Joop
Geesinkweg 541-542, 1096 AX Amsterdam, the Netherlands; Gemplus
International S.A.: 46A, avenue J.F. Kennedy, L-1855 Luxembourg,
Grand Duchy of Luxembourg; Mellon Investor Services LLC, U.S.
Exchange Agent: 480 Washington Boulevard, Attn: Information Agent
Group,AIM # 074-2800, Jersey City, New Jersey 07310, Call Toll Free:

[1] Third quarter 2005, year-to-date 2005 and year-to-date 2006
revenue provided in this press release are on a pro forma basis,
reflecting the combined activity of Gemalto and Gemplus over the
corresponding period, assuming that the combination had taken place
as of January 1, 2005.

[2] Deliveries reported in the first half 2006 earnings release
included some contactless memory cards in Secure Transactions and ID
& Security: actual microprocessor card deliveries in the first half
2006 was 545 million units of which 97 million units in Secure

[3] Europe, Middle East, Africa

[4] EMV is a jointly defined set of specifications dedicated to
payment safety improvement, adopted by Europay, MasterCard and Visa
for the migration of bank cards to microprocessor card technology.

ots Originaltext: Gemalto
Im Internet recherchierbar: http://www.presseportal.de

Corporate Media Relations, Emmanuelle Saby, M.: +33(0)6-09-10-76-10,
emmanuelle.saby@gemalto.com; Corporate Communication, Remi Calvet,
M.: +33(0)6-22-72-81-58, remi.calvet@gemalto.com; Investors
Relations , Stephane Bisseuil , T.: +33(0)1-55-01-50-97,
stephane.bisseuil@gemalto.com ; FINEO, T.: +33(0)1-56-33-32-31


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