Axalto: Third-Quarter 2004 Revenue Up 15.1%.AMSTERDAM, The Netherlands -- --Revenue rises to $239 million in the third quarter of 2004 --Positive outlook on sales and earnings for the year Axalto (Euronext NL0000400653 - AXL) today reports third-quarter revenue increase of 15.1%, at $238.7 million versus $207.4 million in the year-earlier period, and a 10.6% progress at constant exchange rates. Olivier Piou, Axalto CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented: "Axalto's teams delivered another great performance this quarter. It compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with a very strong same quarter last year. During the period the company continued to tightly manage its costs and strengthened its leadership position in the public sector market. Axalto products were selected for the electronic passport passport Document issued by a national government identifying a traveler as a citizen with a right to protection while abroad and a right to return to the country of citizenship. It is normally a small booklet containing a description and photograph of the bearer. qualification in the US, highlighting once again the benefits of the company's disciplined innovation process focused on growth opportunities. Encouraged by these technical and business successes, and strong of our balanced portfolio of activities, we are comforted with our ambition to deliver continued improvement in our financial performance this year."
Third-quarter
--------------------------- -----------------------------------------
% of
Axalto Change total
2004 2003 revenue
--------- ---------
($ ($ in third
million) million) quarter
Cards
Mobile Communication` 137.3 123.5 + 11% 58%
Financial Cards 47.1 40.1 + 17% 20%
Public Sector,
Access, and Other 18.2 19.8 (8)% 8%
Prepaid Phonecards 9.6 14.4 (36)% 4%
--------- ---------
Total Cards 212.1 197.8 + 7% 89%
========= =========
Point-of-Sale Terminals 26.5 9.6 + 176% 11%
========= =========
Total 238.7 207.4 + 15% 100%
--------------------------- --------- --------- ------ --------
All comparisons in this document are at historical exchange rates unless otherwise specified Continued growth in the Cards division Revenue in the Cards division grew by 7.2% in the third quarter to $212.1 million, relative to an already excellent third quarter 2003, despite the pursuit of our proactive production capacity reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation off low-end products (prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. phone cards and magnetic stripe cards A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card. )
towards microprocessor cards. At constant exchange rates, the increase
was 3.1%.
Growth in microprocessor card sales Mobile Communications. Revenue in this segment increased by 11%, and 8% at constant exchange rates, to $137 million in the third quarter of 2004. This rise was driven by sharp volume growth, with the number of SIM cards SIM card abbr (= subscriber identity module card) → carte f SIM SIM card n (Tel) (= Subscriber Identity Module card) → SIM-Karte f sold reaching 66 million units over the quarter. This performance confirms the strong and steady growth in the number of SIM cards sold by Axalto since the beginning of 2004. 49 million and 57 million units had been delivered in the first and second quarters, respectively. Compared with the third quarter of 2003, average SIM card prices fell by 17%, and 19% at constant exchange rates. This decline stems from three distinct factors: --the natural price erosion of entry and mid-range products, --the decrease in the average price of 128KB cards, compared with the third quarter of 2003 when this technology was launched in volume for 2G and 3G applications, --Axalto's decision to encourage customers to migrate from prepaid scratch cards scratch card n. See scratch ticket. scratch card scratch n → carte f à gratter , i.e. without a chip, towards entry-range microprocessor-based SIM cards. The success of this initiative translated into increased volumes shipped, with a corresponding drop in the average sales price indicator as a side-result, and contributed positively to Axalto's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . Furthermore it creates the opportunity for Axalto to promote with these customers higher-end products for the future. The EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. region continued to post excellent performance in the third quarter, with revenue up 18%. Growth in Asia also remained strong, with revenue rising by 13% compared with the third quarter of 2003. The NSA NSA abbr. National Security Agency Noun 1. NSA - the United States cryptologic organization that coordinates and directs highly specialized activities to protect United States information systems and to produce foreign area posted a small revenue decline, of 1.7%, due to a temporary slow-down of deliveries in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. following the decision of a large operator to switch to higher-end products for which deliveries will start in the fourth quarter. The migration of North and South American mobile networks to GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. standards, which generated very strong initial sales in this region during the third quarter of 2003, continues at a strong pace. Financial Cards. In the third quarter, Axalto generated revenue of $47 million in this segment, showing an excellent year-on-year increase of 17%, and 8% at constant exchange rates. Microprocessor card sales volumes rose by 12% to 17 million units. The average sales price was up 1% at constant exchange rates. This was due to an improved average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for most products in the EMEA and NSA regions. Public Sector, Access and Other. Third-quarter revenue in this segment came in at $18 million, decreasing by 8%, and by 11% at constant exchange rates. The third quarter 2003 revenue included a large patent licensing agreement; excluding this item from the comparison basis, revenue rose by 27% relative to the same period of last year, and 25% at constant exchange rates. Pursuit of the pro-active reduction in sales of memory cards (without microprocessor) Prepaid Phonecards. Axalto pursued its strategy to focus on higher value-added microprocessor cards and to supply memory cards only to its strategic customers. Accordingly, revenue from this segment continued to shrink shrink Vox populi noun A psychiatrist , by 33%, and 36% at constant exchange rates, due to lower selling prices overall and reduced volumes supplied in Asia. An excellent quarter for Point-of-Sale Terminals Revenue in the POS (1) See point of sale and packet over SONET. (2) "Parent over shoulder." See digispeak. POS - point of sale Terminals division rose by 176% (and 162% at constant exchange rates) to $27 million in the third quarter of 2004. This growth was fuelled by strong sales in the EMEA region, mainly through supply contracts signed with major European financial institutions. Revenue of $10.7 million for deliveries made to one of these customers in the first half of 2004 but deferred until contract signature in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). was recognized this quarter. The revenue from services related to products delivered under these supply contracts, $5.5 million, is being recognized over the life of the contracts. Revenue by geographic region
Third quarter EMEA Asia NSA
-------------- ---------------- ---------------- ----------------
Revenue Change Revenue Change Revenue Change
Divisions ($ m) ($ m) ($ m)
-------------- ------- ------ ------- ------ ------- ------
Cards 112.8 +17% 55.6 (3%) 43.7 +0%
Point-of-
Sale
Terminals 24.3 +239% 1.8 +24% 0.4 (59%)
-------------- ------- ------ ------- ------ ------- ------
Total 137.1 +32% 57.5 (3%) 44.1 (1%)
-------------- ------- ------ ------- ------ ------- ------
About Axalto Axalto (Euronext: NL0000400653 AXL) is the world's leading provider of microprocessor cards (Gartner Dataquest 2004) -the key to digital networks- and a major supplier of point-of-sale terminals. Its 4500 employees, from 70 nationalities, serve customers in more than 100 countries, with worldwide sales reaching 3 billion smart cards Example of widely used contactless smart cards are Hong Kong's Octopus card, Paris' Calypso/Navigo card and Lisbon' LisboaViva card, which predate the ISO/IEC 14443 standard. The following tables list smart cards used for public transportation and other electronic purse applications. to date. The company has 25 years' experience in smart card innovation and leads its industry in security technology and open systems. Axalto continuously creates new generations of products for use in a variety of applications in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , finance, retail, transport, entertainment, healthcare, personal identification, information technology and public sector markets. Microprocessor cards provide convenience, security and privacy to public and private services operators, their customers and end users. For more info, please visit www.axalto.com |
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