[R]12:00PM New York - Gemalto reported revenues in the year ended December 31st declined 4% to €1.63 billion in 2007 from €1.69 billion in 2006 due to the company’s restructuring program in Western Europe for the Secure Transactions business unit.[/R]

Annual Earnings Review

Gemalto reported revenues in the full year ended December 31st slid 4% to €1.63 billion in 2007 from €1.69 billion a year earlier.

For the year, net profit increased from €1.6 million a year earlier to €89.2 million. Basic earnings per share also increased from €0.02 per share to €0.98 per share.

The company reported gross profit in the year under review declined to €500 million from €503 million a year ago.

Segment Review

Mobile Communications

The Mobile Communications business managed to significantly impact the company’s revenues, especially in the second half as a result of the implementation of the price recovery program, a shift towards higher end products, software and services activities and purchasing and production synergies that were adopted by the company.

The year-on-year drop in average SIM card selling price dropped to 9% at constant exchange rates, compared with the 31% decline a year earlier.

In addition, revenue growth in software and services exceeded 30% mainly as a result of the company’s interest in the emerging markets.

Operating income reached 17.2% in the second half of the year through the combined effect of a clear segmentation and pricing strategy, of the return to growth, and of the positive seasonality effect.

The mobile communication market continued to grow during the year, with robust SIM renewals and strong subscriber net additions.

Gemalto also aims to actively deploy more data services in both highly-penetrated as well as emerging markets.

Secure Transactions

The unit recorded an operating loss of €13.9 million as Gemalto embarked on a restructure of the unit in Western Europe in order to return the company to operating profitability.

The increase in contactless and higher-end EMV cards negatively hit the company’s financial performance.

However strong growth in contactless payment, particularly in Asia, in personalization services and in Pay TV Activity managed to par losses that were induced by the restructuring program.

According to the company, robust EMV market growth and increased demand for higher-end contactless payment cards will continue to drive the underlying performance of Secure Transactions in 2008.

Security

Increased investments that were made by the company in an attempt to improve products resulted in an operating loss of €26.7 million for 2007.

Research & Engineering and Sales & Marketing expenses increased by € 4.1 million and € 6.4 million, respectively.