Wavecom Announces Second Quarter 2007 Financial Results

Regulatory News:

Wavecom S.A. (Paris:AVM) (NASDAQ:WVCM) (ISIN:FR0000073066), today
announced financial results for its second quarter ending June 30,
2007.

Ron Black, Wavecom Chief Executive Officer, commented, "Our second
quarter and first half 2007 financial results confirmed the solid
progress that Wavecom has achieved over the past three years,
illustrating once again growth, both organic and external.
Furthermore, in early July the issue of convertible bonds (OCEANE) in
the European market, raising EUR 80.5 million, confirmed market
confidence in our long-term strategies. We see Wavecom's role as one
of market consolidator and are actively seeking out opportunies for
growth among businesses that have natural adjacencies with our current
activities."

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In millions of euros Consolidated Group Results
Under US GAAP
------------------------------------ ---------------------------------
Q2 2006* Q1 2007 Q2 2007 H1 2007
------------------------------------ -------- -------- ------- -------
Revenues 49.9 48.1 56.1 104.2
------------------------------------ -------- -------- ------- -------
Gross profit 20.4 20.5 24.4 44.9
------------------------------------ -------- -------- ------- -------
Operating expenses 19.8 19.0 19.6 38.6
------------------------------------ -------- -------- ------- -------
Operating income 0.7 1.6 4.8 6.3
------------------------------------ -------- -------- ------- -------
Net income 0.2 1.9 5.0 7.0
------------------------------------ -------- -------- ------- -------
*Note: Q2 2006 results included 2 months of an acquired business.

Additional information
----------------------------------------------------------------------
Operating income 0.7 1.6 4.8 6.3
------------------------------------ -------- -------- ------- -------
Stock option-related expenses (0.4) (0.7) (0.6) (1.3)
------------------------------------ -------- -------- ------- -------
Acquired technology (1.4) - - -
------------------------------------ -------- -------- ------- -------
Amortization expense related to
acquisition (0.8) (1.1) (0.8) (1.9)
------------------------------------ -------- -------- ------- -------
Operating income before stock-option
compensation and amortization
expense related to acquisition 3.3 3.4 6.2 9.5
------------------------------------ -------- -------- ------- -------
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Second Quarter Highlights:

All figures are unaudited and reported in accordance with U.S.
generally accepted accounting principles (U.S. GAAP), unless otherwise
noted. Condensed and consolidated financial tables are provided at the
end of this release.

Revenues: Second quarter 2007 consolidated revenues were EUR 56.1
million, an increase of 12% versus second quarter 2006 or 16% at
constant exchange rates. This year-on-year increase reflects solid
organic growth. The second quarter 2007 revenues also increased by 17%
versus the previous quarter (or 18% at constant currencies), where the
largest increase in value came from the Americas region (+ EUR 4
million or +25%) and the largest quarter-on-quarter increase in
percentage came from the Asia-Pacific region (+44% or + EUR 2.7
million). These strong performances were offset somewhat by slower
sequential growth in the EMEA region (+5% or + EUR 1.3 million).

Sales of new generation products, based on a more powerful ARM9
processor and Wavecom's own Open AT Software Suite are taking hold.
Successful migration to these new products is progressing, in large
part due to their flexibility and forward compatibility with existing
product lines.

In the second quarter, the breakdown by region was as follows:
EMEA 49%; Americas 35%; and APAC 16%. The customer portfolio remained
balanced in the second quarter, with the top ten customers
representing 51% of revenues as compared to 53% in the previous
quarter. No single customer represented more than 8%.

Backlog: As expected, our 12-month backlog on June 30, 2007,
declined from the extremely strong Q1 total of EUR 82.4 million to EUR
70.9 million as of June 30, 2007. It should be noted that the reported
average quarter-end for the first two quarters of 2007 of EUR 76.7
million is significantly higher than the average quarter-end
post-acquisition backlog in 2006 of EUR 50.8 million.

Gross Margin: For the second quarter 2007, gross margin of EUR
24.4 million represented 43.4% of sales compared to 42.7% in Q1 2007.
The gross margin from products remained virtually flat at 46.0%
compared to 45.6% in Q1 2007.

Operating Expenses: Total operating expenses for the second
quarter 2007 were EUR 19.6 million, a flat to the first quarter 2007
level of EUR 19.0 million. At June 30, 2007 headcount (salaried
employees) stood at 410 increasing slightly from 401 at March 31,
2007.

Profit: Operating income for the second quarter 2007 was EUR 4.8
million (8% operating margin as a percentage of revenues), increasing
from EUR 1.6 million (3% operating margin as a percentage of sales) in
the previous quarter, mainly due to the higher revenues. On a
year-over-year basis, this result was significantly better than the
operating profit of EUR 0.7 million in the second quarter 2006. Net
income for the second quarter 2007 was EUR 5.0 million compared to EUR
1.9 million in previous quarter, and EUR 0.2 million a year ago.

As shown in the above table, on a non-GAAP basis, which excludes
stock option expenses and expenses related to our acquisition, the
operating income would have been EUR 6.2 million for the second
quarter 2007, compared to EUR 3.4 million for the previous quarter. It
should be noted that stock options that were awarded at the end of the
second quarter 2007 had a higher strike price due to Wavecom's stock
price appreciation which is expected to put pressure on the operating
results in the second half of the year. We expect to see an impact of
EUR 1.8 million per quarter for Q3 and Q4 versus EUR 0.6 million in
Q2.

Balance sheet: Wavecom's cash position increased
quarter-on-quarter from EUR 53.7 million to EUR 56.1 million at June
30, 2007 while inventory remained virtually flat at EUR 9.2 million
compared to the previous quarter and DSO (Day sales outstanding)
improved by 5 days.

OCEANE (Convertible Bond issue): Wavecom announced the successful
completion of a convertible bond issue on July 17, 2007. The issue
raised a total of EUR 80.5 million which will be used for future
growth including possible acquisitions of companies along the value
chain.

Business news:

Recent announcements:

-- Wavecom named Microteck as its primary distributor in Japan
for the entire range of machine-to-machine (M2M) and
automotive wireless communication solutions including GSM/GPRS
and CDMA. Microtek is well-positioned to tap into the
rapidly-expanding Japanese market. Microtek will now provide
Wavecom's leading-edge wireless communications solutions to
Japanese OEMs that make a wide range of products from security
and alarm systems to fleet management and automotive
telematics applications.

-- Wavecom and Sunlink announced a strategic alliance. Sunlink
International Holdings Limited and Wavecom S.A. announced the
creation of Sunlink Wavecom Limited, a strategic alliance to
develop and support wireless machine-to-machine applications
based on Wavecom's OpenAT(R) Software suite and Wireless
CPU(R) hardware. The new company, Sunlink Wavecom Limited
(90.5% - 9.5%, respectively) was formed with an initial
investment of $1 million US. It will provide support,
maintenance and application-design services specifically using
Open AT(R) Software Suite and reference designs from Wavecom.
Sunlink Wavecom Limited will be incorporated in Hong Kong with
its operations located in Shen-Zhen, China, and will initially
employ a staff of 20 engineers and technical support
specialists.

-- Wavecom announced the launch of the Q26 Ultra its fully
programmable 3G Wireless CPU(R), the Q26Ultra, using high
bandwidth cellular capabilities to address the growing
automotive and alarm/security markets. With wideband CDMA
functionality, it bridges the entire spectrum of bearers from
2G, 2.5G, 2.75G and 3G. It targets two growing markets for
connected machine-to-machine applications: automotive and
security. With this new product, Wavecom is the only wireless
provider today to offer an automotive-grade design and
qualification that will allow car makers to meet the demand
for in-vehicle infotainment. For the security market, the high
band-with capacity makes it ideal for video cameras in
sophisticated alarm and security systems.

Chantal Bourgeat, Wavecom CFO commented: "We are pleased by both
our second quarter and first half-year performance and the long-term
outlook for the business is positive. The recent addition of financial
resources now positions us for targeted external growth." Ms. Bourgeat
reiterated, "The underlying business is generated from diverse markets
and customers' adoption rates differ, implying possible fluctuations
in revenues from one quarter to the next. Additional factors impacting
quarterly sales and performance are seasonality and exchange rate
fluctuations."

Conference Call:

Today at 2:30 p.m. Paris time, Wavecom management will host a
conference call in English reserved for financial professionals
commenting on its second quarter 2007. To access this call, please use
the following numbers: +33 (0) 1 70 99 42 67 in France, +44 (0) 20
7138 0845 in the U.K. and +1 718 354 1152 in the U.S. Visit the
Wavecom corporate website: www.wavecom.com investors section to listen
to the conference call commentary webcast (in English).

Wavecom will announce its Q3 2007 results on October 24, 2007 at
7:00 a.m. Paris time.

About Wavecom

Wavecom is a worldwide leader in embedded industrial wireless
communication solutions for automotive, machine-to-machine and mobile
professional applications. Wavecom's solutions include the Open AT(R)
software platform encompassing the Wavecom Open AT(R) Operating
System, a wide range of Plug-Ins, the Open AT(R) Integrated
Development Environment (IDE) along with a market-leading range of
Wireless CPUs (Central Processing Units), and an expanding portfolio
of services. These complete embedded solutions enable makers of all
types of machines to develop a new breed of intelligent wireless
applications, without the need of external processors and other ASICs
(Application Specific Integrated Circuits) and components.

Founded in 1993 and headquartered in Paris, Wavecom has
subsidiaries in Hong Kong (PRC), Research Triangle Park, NC (USA), and
Farnborough y (UK). Wavecom is publicly traded on Euronext Paris
(Eurolist) in France and on the NASDAQ (WVCM) exchange in the U.S.

This press release contains forward-looking statements that relate
to the company's future business performance, operating expenses and
financial results and objectives. Such forward-looking statements are
based on the current expectations and assumptions of the company's
management only and involve risk and uncertainties. Potential risks
and uncertainties include, without limitation, whether the company
will be commercially successful in implementing its strategies,
whether there will be continued growth in the vertical markets and
demand for the company's products, an unanticipated decrease in orders
from one of the company's principal customers or customer cancellation
or scale-down of a major project, changes in foreign currency exchange
rates, the company's reliance on a single contract manufacturer in
China for all production requirements, dependence on second parties,
new products or technological developments introduced by competitors,
customer and supplier concerns regarding the company's overall
financial position, and risks associated with managing growth.
Unfavorable developments in connection with these and other risks and
uncertainties described in the Company's reports on file with the
Securities and Exchange Commission could cause the company to not
achieve the anticipated or targeted performance or results. As a
consequence, the Company's actual performance and results may be
materially different from those expressed by the forward-looking
statements above.

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WAVECOM S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)

Prepared in accordance with U.S. generally accepted accounting
principles.

Three months ended
June 30, March 31, June 30,
2006 2007 2007

---------- ---------- ----------
Euro Euro Euro
Revenues :
Product sales 49,187 47,785 55,776
Services revenue 216 332 334
Licensing revenue 484 - -
---------- ---------- ----------
49,887 48,117 56,110
Cost of revenues :
Cost of goods sold 28,762 26,012 30,139
Cost of services 697 1,559 1,600
---------- ---------- ----------
29,459 27,571 31,739
---------- ---------- ----------
Gross profit 20,428 20,546 24,371
Operating expenses :
Research and development 8,119 7,758 8,179
Sales and marketing 4,405 5,413 5,740
General and administrative 5,847 5,784 5,700
Acquired in process technology 1,400 - -
---------- ---------- ----------
Total operating expenses 19,771 18,955 19,619
---------- ---------- ----------
Operating income 657 1,591 4,752
---------- ---------- ----------
Interest income and other financial
income, net 176 417 419
Foreign exchange loss, net. (647) (48) (50)
---------- ---------- ----------
Total financial income (loss) (471) 369 369
---------- ---------- ----------
Income before minority interests and
income taxes 186 1,960 5,121
Minority interests - - -
---------- ---------- ----------
Income before income taxes 186 1,960 5,121
Income tax expense 19 12 91
---------- ---------- ----------
Net income 167 1,948 5,030
========== ========== ==========
Basic net income per share 0.01 0.13 0.33
========== ========== ==========
Diluted net income per share 0.01 0.12 0.30
========== ========== ==========
Number of shares used for computing :
- basic 15,384,077 15,401,390 15,447,796
- diluted 15,946,575 16,230,460 16,645,446
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WAVECOM S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)

Prepared in accordance with U.S. generally accepted accounting
principles.

Six months ended
June 30, June 30,
2006 2007

---------- ----------
Euro Euro
Revenues :
Product sales 76,648 103,562
Services revenue 486 665
Licensing revenue 969 -
---------- ----------
78,103 104,227
Cost of revenues :
Cost of goods sold 41,828 56,152
Cost of services 873 3,158
---------- ----------
42,701 59,310
---------- ----------
Gross profit 35,402 44,917
Operating expenses :
Research and development 14,020 15,937
Sales and marketing 7,291 11,154
General and administrative 11,415 11,484
Acquired in process technology 1,400 -
---------- ----------
Total operating expenses 34,126 38,575
---------- ----------
Operating income 1,276 6,342
---------- ----------
Interest income and other financial income, net 496 836
Foreign exchange loss, net (1,328) (98)
---------- ----------
Total financial income (loss) (832) 738
---------- ----------
Income before minority interests and income
taxes 444 7,080
Minority interests - -
---------- ----------
Income before income taxes 444 7,080
Income tax expense 73 102
---------- ----------
Net income 371 6,978
========== ==========
Basic net income per share 0.02 0.45
========== ==========
Diluted net income per share 0.02 0.42
========== ==========
Number of shares used for computing :
- basic 15,379,790 15,424,475
- diluted 15,781,745 16,515,843
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WAVECOM S.A.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)

Prepared in accordance with U.S. generally accepted accounting
principles.

At December 31,At June 30,
2006 2007
------------- -----------
Euro Euro
ASSETS

Current assets :
Cash and cash equivalents 54,776 56,054
Accounts receivable, net 28,727 33,939
Inventory 6,631 9,184
Value added tax recoverable 602 745
Prepaid expenses and other current assets 2,361 3,522
------------- -----------
Total current assets 93,097 103,444
Other assets :
Long-term investments 3,639 3,656
Other assets 3,166 2,708
Research tax credit 1,771 1,895
Income tax recoverable 9,617 9,617
Intangible and tangible assets, net 19,770 18,198
Goodwill 8,117 8,117
------------- -----------
Total assets 139,177 147,635
============= ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities :
Accounts payable 36,254 36,607
Accrued compensation 9,367 6,947
Current portion of other accrued expenses 3,713 3,541
Current portion of capitalized lease
obligations 233 203
Deferred revenue and advances received
from customers 98 1,011
Other liabilities 653 583
------------- -----------
Total current liabilities 50,318 48,892

Long-term liabilities :
Long-term portion of other accrued
expenses 15,957 16,259
Long-term portion of capitalized lease
obligations 385 355
Other long-term liabilities 858 737
------------- -----------
Total long-term liabilities 17,200 17,351

Commitments and contingencies
- -
Shareholders' equity :
Shares, euro 1 nominal value, 15,703,450 shares authorized, issued and
outstanding at
June 30, 2007 (15,554,153 at December 31,
2006) 15,554 15,703
Additional paid-in capital 139,393 141,919
Treasury stock at cost (156,345 shares at
June 30, 2007 and December 31, 2006) (1,312) (1,312)
Accumated deficit (79,947) (72,968)
Accumulated other comprehensive income
(loss) (2,029) (1,950)
------------- -----------
Total shareholders' equity 71,659 81,392
------------- -----------
Total liabilities and shareholders'
equity 139,177 147,635
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WAVECOM S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Prepared in accordance with U.S. generally accepted accounting
principles.

Six months ended June 30,
2006 2007

------------- -----------
Euro Euro
Cash flows from operating activities :
Net income 372 6,978
Adjustments to reconcile net income to net
cash provided from
operating activities:
Amortization and impairment of intangible
and tangible assets 2,754 4,257
Share-based compensation 663 1,348
Loss on sales and retirement of tangible
assets 6 4
Net increase (decrease) in cash from
working capital items 345 (9,579)
------------- -----------
Net cash provided by operating
activities 4,140 3,008
------------- -----------
Cash flows from investing activities :
Disposal (acquisition) of long-term
investments 4 (17)
Purchases of intangible and tangible
assets (1,785) (2,652)
Proceeds from sale of intangible and
tangible assets (25,772) -
Proceeds from sale of intangible and
tangible assets 155 -
------------- -----------
Net cash used by investing
activities (27,398) (2,669)
------------- -----------
Cash flows from financing activities :
Principal payments on capital lease
obligations (184) (147)
Proceeds from exercise of stock options
and founders' warrants 62 1,327
------------- -----------
Net cash provided (used) by
financing activities (122) 1,180
Effect of exchange rate changes on cash and
cash equivalents (77) (241)
------------- -----------
Net increase (decrease) in cash and cash
equivalents (23,457) 1,278
Cash and cash equivalents, beginning of
period 60,663 54,776
------------- -----------
Cash and cash equivalents, end of period 37,206 56,054
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