Gemplus International SA, the world’s largest smart card vendor, says the uncertain economic environment means that it will not meet its forecast of breaking even in its current fourth quarter.
Even worse, CEO Alex Mandl said that a preliminary view of 2003 suggests that it will not be able to meet market expectations and, because its visibility is not yet clear, it can give no specific guidance about what the year will bring.
Mandl, who took over as CEO in September after the Luxembourg-based company had been riven by a boardroom feud, promised to reveal his strategic direction for the company within weeks. He said that 2003 will be a year of rebuilding and refocusing the operations.
Gemplus has been struggling and the company said that in the third quarter to September 30, it made a net loss of 38.6m euros ($37.8m), down from income of 6.6m euros ($6.4m) on revenue that fell 9.1% to 205.6m euros ($201.5m). For the first nine months, the loss was 224.1m euros ($219.6m), up from a loss of 40.4m euros ($39.6m) on revenue down 23.3% at 591.9m euros ($580m). Mandl said that its gross margin had been boosted by lower chip prices, although this might not continue in the fourth quarter.
The company faces problems in both its major markets. In telecoms revenue was down 3.6% at 139.9m euros ($137.1m) though it produced an adjusted gross profit figure showing an increase of 19.7% to 45.1m euros ($44.1m).
In the financial services and security market, revenue was down 7.5% at 65.7m euros ($64.4m) with the company blaming delays to the roll-out of Europay Mastercard and Visa (EMV) cards in Europe, and a severe contraction in the US banking and retail smart card market.