"C) The wireless industry shows some signs of growth, but still modest (high single-digit sequential growth.) At least there is some ray of hope for growth, but it is still pretty modest."
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Wavecom Announces Third Quarter 2002 Earnings
ISSY-LES-MOULINEAUX, France--(BUSINESS WIRE)--Oct. 22, 2002--Wavecom(NASDAQ:WVCM - News):
Company reports record revenues of EUR 171 million up 91% from Q3 2001 and up 26% from Q2 2002
Strong profitability - gross margin reached 32% of sales and operating income was EUR 26.6 million for the quarter
Wavecom SA (Nasdaq: WVCM; Euronext Nouveau Marche: 7306), the world's number one provider of integrated wireless modules, today announced earnings for the third quarter of 2002. All results are unaudited and reported in accordance with U.S. generally accepted accounting principles (US GAAP).
For the third quarter of 2002, Wavecom reported that total revenues rose 91% to EUR 171 million from EUR 89.6 million during the third quarter of 2001, and increased 26% from EUR 136 million achieved in the second quarter of 2002. The rise in revenues reflects continued strong sales into the Asian market. Sales to the Asia-Pacific region represented 87.2% of total revenues, with 10.3% for the Europe/Middle East/Africa region and 2.5% for the Americas region. Sales of WISMO modules accounted for 95.5% of total third quarter revenues (modem sales: 4.2%, service revenues: less than 1%).
Total product shipments reached 2.9 million units in the third quarter, as Wavecom announced the shipment of its 10 millionth WISMO since production of WISMOs began. Unit shipments increased 39% sequentially from the second quarter. Product backlog remained at EUR 244 million as of September 30, 2002, unchanged from June 30, 2002, but management expects sequential growth in sales for the fourth quarter of 2002.
The quarterly product revenue breakdown by market was: Personal Communication Devices (which includes mobile telephones and personal digital assistants), 84.2%; Machine to Machine (M2M), 4.0%; Automotive, 2.8%; and indirect sales to Distributors, 9.0%, which the Company believes represents primarily the M2M application market.
Product gross margin for the third quarter 2002 reached 32%, compared with 29.2% for the previous quarter and 21.2% for the third quarter last year. The strong increase reflects both continuing improvement in manufacturing efficiency and component price declines. Average selling prices for WISMOs continued to trend down, decreasing by 9% from the previous quarter and 27% from the third quarter of 2001. Wavecom plans to continue its aggressive price reduction strategy in order to achieve two goals: first, to expand its addressable market and secondly, to increase volumes with existing customers.
Operating expenditures for the third quarter of 2002 were EUR 27.1 million, versus EUR 16.7 million for the previous year's third quarter and EUR 26.5 million for the second quarter of 2002. The increase from Q3 2001 is largely a result of a headcount rise across the board in order to support the continued rapid growth of the Company. At September 30, 2002, total personnel numbered 825 compared with 725 at the end of June 2002 and 580 at the end of December 2001.
For the third quarter of 2002, Wavecom increased operating income to EUR 26.6 million (15.6% of sales), compared with EUR 1.5 million during the same quarter a year ago, and representing an increase of 110% from operating income of EUR 12.7 million in the second quarter of 2002.
The Company reported net income of EUR 17.3 million for this year's third quarter, or EUR 1.16 per share (EUR 1.11 on a diluted basis), compared with EUR 4.2 million, or EUR 0.29 per share (EUR 0.27 on a diluted basis), for the third quarter of 2001. This represents an increase of 201% compared with the second quarter 2002 net income of EUR 5.8 million, or EUR 0.39 per share (EUR 0.37 on a diluted basis). During the quarter, the Company had interest income of EUR 787,000 and a net foreign exchange gain of EUR 981,000. Wavecom had tax expense for the first time during the third quarter of 2002 amounting to EUR 11.3 million. All tax loss carry forwards in France have now been fully utilized.
For the nine months ended September 30, 2002, total revenues were EUR 415.7 million compared with EUR 217.3 million for the comparable 2001 period - an increase of 91%. The Company reported total gross profit of EUR 120.9 million (reflecting a product gross margin of 29.7%) for the first nine months of 2002, up significantly compared with EUR 40.8 million (with a product gross margin of 18.4%) in the first nine months of 2001. For the nine months ended September 30, 2002, operating income totaled EUR 45.6 million compared with an operating loss of EUR 1.5 million in the same period in 2001. Net income for the first nine months of 2002 was EUR 30.8 million, or EUR 2.07 per share (EUR 2.00 diluted), compared to EUR 3.1 million, or EUR 0.21 per share (EUR 0.20 diluted) in the first nine months of 2001.
Inventories increased significantly from EUR 29.3 million at the end of Q2 2002 to EUR 48 million as of September 30, 2002 as the company managed a number of factors related to adjustments in customer forecasts and new Wavecom product introductions. As of September 30, 2002, the Company had cash, cash equivalents and short-term investments of EUR 148 million, compared with EUR 123 million at June 30, 2002.
Wavecom Chairman, Michel Alard commented, "We are very satisfied with Wavecom's strong financial performance during the third quarter of 2002, although limited longer-term visibility causes us to maintain a conservative outlook. Nevertheless, we believe the evolutions of the wireless market space are favorable to Wavecom and that our leading-edge technology positions us to compete very aggressively."
Fourth quarter and full year 2002 revenues will be announced on January 22, 2003 at 7:30 am Paris time. Complete results for the fourth quarter and full year 2002 will be reported on February 11, 2003 at 7:30 am Paris time.
Visit the Wavecom corporate website: www.wavecom.com investors section to listen to the Q3 2002 conference call commentary webcast.
About Wavecom
A world pioneer in innovative wireless solutions, Wavecom was the first company to commercialize GSM technology in the form of a standard module, the WISMO, making wireless technology available to everyone. WISMO modules are compact devices that include all of the hardware, software and other technology needed to enable wireless communications over the GSM/GPRS, CDMA and future 3G networks.
WISMO modules enable any equipment or system to communicate without a fixed line connection. Applications include mobile telephones, automotive navigation and information systems, personal digital assistants with wireless communications functions, and devices enabling communication between vending machines or utility meters and control centers.
Founded in 1993 and headquartered near Paris in Issy-les-Moulineaux, Wavecom has subsidiaries in Hong Kong (PRC), Seoul (South Korea) and San Diego (USA). Company revenues totaled EUR 322.7 million in 2001 and EUR 415.7 million in the nine months ended September 30, 2002. Wavecom is publicly traded on Euronext Paris (Nouveau Marche 7306) in France and on the NASDAQ (WVCM) exchange in the U.S.
www.wavecom.com
This press release may contain forward-looking statements that relate to the Company's plans objectives, estimates and goals. Words such as "expects," "anticipates," "intends," "plans," "believes" and "estimates," and variations of such words and similar expressions identify such forward-looking statements. The Company's business is subject to numerous risks and uncertainties, including probable variability in the Company's quarterly operating results, manufacturing capacity constraints, dependence on a limited number of customers, variability in production yields, dependence on third parties, currency rate changes and risks associated with managing growth. These and other risks and uncertainties, which are described in more detail in the Company's most recent filings with the Securities and Exchange Commission, could cause the Company's actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. |
