Wavecom reports 2002 full-year revenues of €551.1 million

Year-on-Year Annual Revenues Increase 70.8%, Q4 Revenues Increase 28.6%
Issy-les-Moulineaux, France-January 22, 2003

Wavecom S.A. (NASDAQ: WVCM; Euronext Nouveau Marché: 7306), the world’s number one provider of integrated wireless modules, today announced revenues for the fourth quarter and full-year 2002. All figures are unaudited.

For the quarter ended December 31, 2002, Wavecom reported total revenues of €135.4 million compared with €105.3 million in the same period last year, an increase of 28.6%. Sequentially, revenues decreased 20.8% from €171.0 million in the third quarter of 2002. Total revenues for the full year ended December 31, 2002 increased 70.8% to €551.1 million compared with €322.7 million in 2001, in line with guidance provided by Wavecom’s management in early December 2002. Sales to telephone handset manufacturers in Asia continued to drive Wavecom’s sales.

Wavecom Chairman, Michel Alard, commented, “We are pleased at the strong year-on-year growth, exceeding 70%, which reinforces our position in the marketplace and confirms acceptance of our leading-edge technology”.

Total product shipments were 2.3 million units in the fourth quarter, down from 2.9 million units in the previous quarter. For the full year of 2002, product shipments totaled 8.8 million units, more than double the 4.0 million units shipped in 2001.

Revenues for the fourth quarter of 2002 by geographic region were as follows: Asia-Pacific: 82.0%; Europe, Middle-East and Africa: 16.3%; Americas: 1.7%. Revenues by target market for the fourth quarter of 2002 were: Personal Communication Devices (PCD): 78.8%; Machine to Machine (M2M), 2.7%; Automotive, 4.2%; and indirect sales to Distributors, 14.3%, which the Company believes represents primarily the M2M application market. Sales to these emerging non-PCD markets represented 17.8% of sales in 2002 and grew to €98.0 million for the full year 2002 from €67.4 million in 2001, representing a year-on-year increase of 45% driven primarily by new applications in the automotive market.

For the fourth quarter, the top ten customers represented 87.1%, down from 93.1% in the previous quarter; TCL (66.3% of sales) was the only customer representing more than 10%.

Backlog at December 31, 2002 was €95 million, which the company expects to ship primarily during the first quarter of 2003. Deborah Choate, Wavecom CFO said, “Given the increasingly competitive situation in the Chinese handset market, our customers are extremely cautious and are placing orders much closer to delivery dates than in the past”.

“Although our long-term outlook remains positive, the first half of 2003 is expected to be difficult as the Chinese handset market matures and as competition intensifies. Our management team is putting in place an aggressive action plan in order to adapt quickly to the changing landscape”, said Aram Hékimian, Wavecom CEO.

Management reconfirmed guidance given in December 2002 that, despite the fourth quarter decline in sales, Wavecom expects that product gross margin for the fourth quarter will exceed the Company’s target of 30% of sales, while the operating margin for the fourth quarter will most likely fall short of the Company’s target of 12% of sales. Management also indicated that inventories at December 31, 2002 will be below the €48 million level of September 30, 2002.

Full financial results for 2002 will be announced on February 11, 2003, at 7:30 am Paris time.

Visit the Wavecom corporate website: www.wavecom.com investors section to listen to the Q4 2002 conference call commentary webcast, live, beginning at 9 am NY Time (3 pm Paris Time).