Gemalto Reports Fourth Quarter and Full Year 2007 Revenue(1)

30/01/2008 - 11:10

Regulatory News:

-- Q4 2007 revenue(1) up by 8% to EUR 471 million

-- Strong demand contributing to 35% revenue growth in Security
and 7% in Mobile Communication

-- SIM card average selling price stable compared with prior
quarter

-- Second semester revenue growth of 7% leads to stable full year
2007 revenue at EUR 1 631 million

-- Net cash position at EUR 314 million after 2007 share
repurchase programs of EUR 148 million

All revenue and average selling price variations in this press
release are by reference to 2006 fourth quarter and full year revenue
and are stated at constant exchange rates unless otherwise mentioned.
All the figures presented in this press release are unaudited. Revenue
for the fourth quarter of 2006 and pro forma full year 2006 revenue,
reflecting the combined activity of Axalto and Gemplus over the
period, are presented in Appendix 2. IFRS revenue figures for the
fourth quarter and the full year 2007 are presented in Appendix 4.

Gemalto (Euronext NL0000400653 - GTO), the world leader in digital
security today announced its revenue for the fourth quarter and the
12-month period ended December 31, 2007:

-0-
*T
Year-on- Year-on-
year year
change change
EUR in millions Q4 2007 at FY 2007 at
constant constant
exchange exchange
rates rates
----------------------------------------------------------------------
Mobile Communication 273.5 +7% 925.5 (2%)
----------------------------------------------------------------------
Secure Transactions(2) 109.1 0% 413.4 +4%
----------------------------------------------------------------------
Security(2) 62.2 +35% 192.9 +9%
----------------------------------------------------------------------
Public Telephony 11.2 (1%) 43.7 (21%)
----------------------------------------------------------------------
Point-of-Sale Terminals 15.1 +11% 56.0 +16%
----------------------------------------------------------------------
Total revenue 471.0 +8% 1 631.5 0%
----------------------------------------------------------------------
*T

Olivier Piou, Chief Executive Officer, commented: "2007 concluded
on a strong quarter for Gemalto, evidencing the progress in
implementing our strategy and leveraging our market leadership. Our
focused efforts delivered more steady sales prices and renewed
momentum in high-end product migration, fuelling growth in both
emerging and developed markets. Services also continued to develop
rapidly. Following this good quarter, preliminary indications of the
Company adjusted operating income for the full year 2007 is that it
will be above the current consensus of EUR 71 million. Growth in the
second half of 2007, excellent year-end performance of our operations,
faster and better realization of synergies, all provide solid basis
for substantial progress in our adjusted earnings performance."

Fourth quarter and full year 2007 revenue analysis

Total revenue for the fourth quarter of 2007 was EUR 471 million,
up by 8% compared to the same period of 2006. Return to year-on-year
growth continued this quarter with strong performance in the Mobile
Communication and Security segments.

Second half growth of 7%, with revenue at EUR 872 million, led to
a full year 2007 revenue at EUR 1 631 million, stable (higher by 0.3%)
compared with the full year 2006 revenue.

Segment information

Mobile Communication

Mobile Communication reported strong growth in the fourth quarter
of 2007 compared to an already high fourth quarter of 2006. Across all
regions, product mix continued to improve as operators move forward
with migration plans. Revenue growth in software and services this
quarter exceeded 30%, generated from successful deployments of our
wireless solutions with operators across all regions. Both emerging
and traditional markets remain robust and continue to benefit from
strong global subscriber growth and high churn rates.

When compared to the third quarter, average selling price was up
by 0.4%. Due to constant attention and efforts across the whole
organization, year-on-year average selling price reduction was
contained to 2%, a significant improvement when compared with the 25%
decline recorded a year ago.

Gemalto also further demonstrated the competitive advantage of its
digital security solutions for mobile applications, providing the
first commercially launched SIM-based mobile banking service
established nationwide between all Colombian banks and GSM operators.
Continued progress was also made in mobile contactless payments with
the successful integration of the Japanese international banking
network JCB contactless payment solution, J/Speed, onto Gemalto´s
NFC(3) high-end SIM platform.

Secure Transactions

Secure Transactions Q4 2007 revenue was essentially even with last
year. EMV rollout in emerging markets and renewals in more mature
markets continue to generate robust market demand. Steady growth of
personalization services and contactless payment activities did offset
the disturbance induced early in the quarter by the restructuring
program in Western Europe. Overall the segment demonstrated good
resilience under a severely constrained operating environment.

In Germany, Gemalto made important progress with the Secure Chip
Card Operating System (SECCOS) certification of its high-end Desineo
banking cards. This advanced card that incorporates numerous banking,
e-purse and digital signature applications is a strong evidence of
Gemalto´s ability to meet Germany´s particularly high technical
standards and of our readiness for mass deployment in Germany.

Security

Both Government Programs and Identity & Access Management (IAM)
contributed to the strong performance posted by the Security segment
in the fourth quarter of 2007.

Government Programs reported substantial revenue growth of 28% for
the fourth quarter, reflecting the continuing ramp-up of the many
contracts won previously. This business is characterized by long sales
and delivery cycles, with deliveries recurring throughout the rollout
period. Delays in e-Healthcare projects, particularly in Western
Europe, were fully offset by large deliveries of e-Passports and e-ID
cards, and by services which are part of comprehensive end-to-end
solutions.

IAM revenue was up by 14% in the fourth quarter, driven by
deliveries of online banking authentication solutions to Barclays Bank
in the UK as well as shipments of secure USB tokens to Asian
customers.

Gemalto, in cooperation with Lexar, recently launched for the IAM
market the innovative, multi-purpose Secure Enterprise Guardian. This
unique and highly interoperable smart USB device combines a Microsoft
compliant security solution with strong memory encryption technology
to provide convenient portable authentication and secure data storage
for computer users.

Patent licensing activity generated revenue of EUR 23 million in
the full year 2007, compared with EUR 27 million in 2006.

Public Telephony

Public Telephony posted a good quarter considering the continuing
decline of the memory card market for Public Telephony which is
attributable to the broader usage of mobile telephony worldwide.

Point-of-Sale Terminals

The new range of products developed on a common, highly adaptable
new technology platform provided commercial success and revenue growth
in the fourth quarter and full year 2007.

Regional analysis

Fourth quarter and full year 2007 revenue by region

-0-
*T
Year-on- Year-on-
year year
change change
EUR in millions Q4 2007 at FY 2007 at
constant constant
exchange exchange
rates rates
----------------------------------------------------------------------
EMEA 269.7 +7% 913.0 0%
----------------------------------------------------------------------
North & South America 113.6 +12% 387.0 +1%
----------------------------------------------------------------------
Asia 87.7 +7% 331.5 0%
----------------------------------------------------------------------
Total revenue 471.0 +8% 1 631.5 0%
----------------------------------------------------------------------
*T

In the fourth quarter of 2007, EMEA and the Americas reported
respectively 7% and 12% revenue growth, driven by Mobile Communication
and Security. In the same period, revenue in Asia was up by 7%, due to
strong deliveries in Secure Transactions and Security.

For the full year 2007, revenue in all regions were essentially
stable compared with prior year.

Net cash position

The net cash position(5) was EUR 314 million at the end of 2007
versus EUR 396 million at the end of 2006, after spending EUR 148
million on the share repurchase programs, i.e. EUR 144 million in the
Gemalto share buy-back program and EUR 4 million for the acquisition
of the remaining Gemplus shares during the squeeze out program in
January.

Outlook

In the second half of 2007, operating margin(6) will reflect the
usual favorable seasonal pattern and the increasing contribution of
our digital security solutions deployments. It will also benefit from
the stable pricing pattern observed during the year due to our price
discipline and from additional cost synergies from the combination.
Preliminary indications of the Company adjusted operating income(6)
for the full year 2007 is that it will be above the current consensus
of EUR 71 million.

Outlook for 2009 remains unchanged.

Reporting calendar

Full year 2007 earnings will be reported on March 20, 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 1970 or +1 718 354 1389 or +33 1 70 99 43 00.

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 February 4,
2008 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: 8418235#.

About Gemalto

Gemalto (Euronext NL 0000400653 GTO) is the leader in digital
security with 2007 annual revenues of EUR 1.6 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 one 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) 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.

(2) 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 5. 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 2007 represented
approximately 1% of Gemalto total revenue.

(3) Near Field Communication

(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 5. 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 2007
represented approximately 1% of Gemalto total revenue.

(5) Net cash position is equal to total cash and short-term
deposits minus financial debt.

(6) 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)

-0-
*T
Q4 Q4 % FY 2006 FY %
In millions of units 2006 2007 growth pro 2007 growth
forma(7)
----------------------------------------------------------------------
Mobile Communication 252 273 +8% 901 956 +6%
----------------------------------------------------------------------
Secure Transactions(8) 60 66 +10% 218 231 +6%
----------------------------------------------------------------------
Security(8) 10 16 +59% 29 38 +29%
----------------------------------------------------------------------
Total 322 354 +10% 1 148 1 225 +7%
----------------------------------------------------------------------
*T

Appendix 2

Fourth quarter revenue by business segment at historical rates

-0-
*T
% change at % change
historical at
EUR in millions Q4 2006 Q4 2007 exchange constant
rates exchange
rates
----------------------------------------------------------------------
Mobile Communication 272.8 273.5 0% +7%
----------------------------------------------------------------------
Secure Transactions(8) 114.1 109.1 (4%) 0%
----------------------------------------------------------------------
Security(8) 47.7 62.2 +30% +35%
----------------------------------------------------------------------
Public Telephony 12.3 11.2 (9%) (1%)
----------------------------------------------------------------------
Point-of-Sale Terminals 14.3 15.1 +5% +11%
----------------------------------------------------------------------
Total revenue 461.3 471.0 +2% +8%
----------------------------------------------------------------------
*T

Full year revenue by business segment at historical rates

-0-
*T
% change at % change
EUR in millions FY 2006 historical at
pro FY 2007 exchange constant
forma(7) rates exchange
rates
----------------------------------------------------------------------
Mobile Communication 993.9 925.5 (7%) (2%)
----------------------------------------------------------------------
Secure Transactions(8) 412.1 413.4 0% +4%
----------------------------------------------------------------------
Security(8) 182.8 192.9 +6% +9%
----------------------------------------------------------------------
Public Telephony 58.8 43.7 (26%) (21%)
----------------------------------------------------------------------
Point-of-Sale Terminals 50.4 56.0 +11% +16%
----------------------------------------------------------------------
Total revenue 1 698.2 1 631.5 (4%) 0%
----------------------------------------------------------------------
*T

(7) Pro forma measures reflect the combined activity of Gemalto
and Gemplus over the period, and assume that the combination had taken
place as of January 1, 2005.

(8) 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 5. 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 2007
represented approximately 1% of Gemalto total revenue.

Appendix 3

Average exchange rates between the Euro and the US dollar

-0-
*T
EUR/USD
----------------------------------------
First quarter 2006 1.20
----------------------------------------
Second quarter 2006 1.25
----------------------------------------
Third quarter 2006 1.27
----------------------------------------
Fourth quarter 2006 1.28
----------------------------------------
Full year 2006 1.25
----------------------------------------
First quarter 2007 1.31
----------------------------------------
Second quarter 2007 1.35
----------------------------------------
Third quarter 2007 1.36
----------------------------------------
Fourth quarter 2007 1.44
----------------------------------------
Full year 2007 1.37
----------------------------------------
*T

Appendix 4

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 full year 2006
presented in Appendix 2. An adjustment in the amount of EUR 2 million
was recorded in the fourth quarter of 2007 in the Adjusted financial
statements in relation with the restructuring program in Western
Europe: it explains the difference between the IFRS revenue and the
Adjusted revenue for the fourth quarter and the full year 2007
presented in Appendix 2.

Fourth quarter and full year revenue by business segment at
historical rates

-0-
*T
EUR in millions Q4 Q4 FY 2006 FY 2007
2006 2007
----------------------------------------------------------------------
Mobile Communication 272.8 273.5 766.9 925.5
----------------------------------------------------------------------
Secure Transactions(9) 114.1 107.1 324.6 411.4
----------------------------------------------------------------------
Security(9) 47.7 62.2 138.7 192.9
----------------------------------------------------------------------
Public Telephony 12.3 11.2 38.8 43.7
----------------------------------------------------------------------
Point-of-Sale Terminals 14.3 15.1 50.4 56.0
----------------------------------------------------------------------
Total revenue 461.3 469.0 1 319.4 1 629.5
----------------------------------------------------------------------
*T

(9) 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 5. 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 2007
represented approximately 1% of Gemalto total revenue.

Appendix 5

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

-0-
*T
FY 2006
Q4 2006 Q4 2006 FY 2006 pro
before after pro forma(10) forma(10)
EUR in millions changing changing before change after
the the the changing
reporting reporting reporting the
segment segment segment of reporting
of of Transport segment
Transport Transport activity of
activity activity Transport
activity
----------------------------------------------------------------------
Secure Transactions 107.4 114.1 391.7 412.1
----------------------------------------------------------------------
Security 54.5 47.7 203.3 182.8
----------------------------------------------------------------------
*T

-0-
*T
Q4 2007 Q4 2007 FY 2007
before after FY 2007 after
changing changing before change changing
EUR in millions the the the the
reporting reporting reporting reporting
segment segment segment of segment
of of Transport of
Transport Transport activity Transport
activity activity activity
----------------------------------------------------------------------
Secure Transactions 105.3 109.1 393.8 413.4
----------------------------------------------------------------------
Security 66.0 62.2 212.5 192.9
----------------------------------------------------------------------
*T

(10) Pro forma measures reflect the combined activity of Gemalto
and Gemplus over the period, and assume that the combination had taken
place as of January 1, 2005.