Gemplus warns of losses

June 7, 2001
Web posted at: 0920 GMT

LONDON (CNN) -- French smart card maker Gemplus International has warned reduced demand for its SIM cards in mobile phones will mean a second-quarter loss.

The biggest maker of smart cards says it expects revenues to be down 4 percent on the same period a year ago at around 265 million. Losses, excluding restructuring charges, should be 10-15 million, it said.

Gemplus and U.S. rival Schlumberger (SLB: Research, Estimates) accounted for two-thirds of worldwide smart card and memory card shipments in 2000, according to analysts Dataquest. Gemplus shipped 185 million smart cards to Schlumberger's  152 million.

"We are experiencing a softening in SIM card demand due to a slowdown in GSM subscriber growth and inventory issues at operators," said Chief Executive Antonio Perez in a statement.

"The wireless segment is approximately 50 percent of our business...we believe this is an industry-wide phenomenon and that we are, in fact, maintaining if not gaining market share."

Gemplus reported a net first-quarter loss of 7.16 million in May compared to a profit of 14.53 million a year earlier. It again cited slowing mobile sales as the problem.

The company now expects revenues to be 1.225 to 1.265 billion for the full year, or 2-5 percent growth from 2000. Operating profit, before restructuring costs , should be between 5 million and 35 million.

Gemplus shares slumped 11.8 percent on the news in Paris on Thursday to 3.37. They have fallen 62 percent in value since the start of the year.

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