ARCHOS : ARCHOS reports Q1 2007 results

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IGNY, France - April 30, 2007 - For the first quarter of 2007 ending March 31st, ARCHOS, a technology leader in the field of Portable Media Players, reports sales of ¤ 23.0 million, a decrease of 20% compared to the same period in 2006 which had unusually large gains over 2005.

Sales Revenue In M¤ Sales Q1
2007
Sales Q1
2006
Variation
2007 / 2006
Sales Q1
2005
Variation
2007 / 2005
Europe 16.5 19.9 -17 % 12.2 +35 %
Asia 1.8 4.2 -57 % 1.4 +28 %
North America 4.4 3.9 +13 % 3.2 +37 %
Total ARCHOS 23.0 28.9 -18% 16.8 +37%
EchoStar 0 0.9 NS 0  
Total 23,0 29.0 -20 % 16,8 +37 %

Within the European region, France has continued its growth while Germany and England decreased during the first quarter.

Sales results for the Asia region decreased significantly due to the transition from importation via Hong-Kong to direct distribution in China. The time needed for the Chinese legal entity to become operational and the development of the distribution network to the 24 Chinese provinces were the main reasons for this decrease. The subsidiary will be fully operational in the 2nd quarter 2007.

North America continues its growth with an increase of 13% for the quarter. The North American region maintains strong sales from major retail accounts secured in late 2006, including Wal-Mart, Target and Office Depot. Additionally, the company expanded distribution of its products through Circuit City, the region's second largest consumer electronics retailer, reaching over 600 stores nationwide.

The expansion of retail distribution to more than 20,000 locations in the first quarter demonstrates retailer confidence in both the mobile media segment and in ARCHOS' strategy of offering a diversified, innovative, high quality product line.

ARCHOS 704-WiFi Introduction

With retailer stock levels now in line with sales perspectives, growth is expected over the next few months. Part of this growth is due to the product range being enhanced with the launch of the ARCHOS 704 WiFi in March. The ARCHOS 704-WiFi is the industry's only PMP with a 7" touch-screen and full wireless capabilities. The large screen of this latest ARCHOS PMP offers an unequalled viewing experience by allowing the user to make the most of their videos, photos and music, to stream content from the PC to the device, and to navigate on the Internet wirelessly.

Perspectives for 2007

The objective for the second quarter 2007 is to recover to the level of growth realized in 2006 and, through the introduction of the first products in the Generation 5 product line, establish a strong trajectory of growth that is maintained through the remainder of the year. The increase of  product sales will come as a result of the  significant technology innovations in the Generation 5 product line, enhanced content offerings through multiple partnerships, direct content access via wireless access points, and revised pricing to appeal to an even broader mass market.

Specific objectives for the remainder of 2007:

  • Show sales growth at least equal to that achieved in 2006, with significant growth during the holiday buying season of September through December. The fundamental economics for ARCHOS will remain the same as last year, a gross margin of 25% and an operating margin of 5%. 
  • Secure additional partnerships that bring a range of high quality music and video content to the ARCHOS Generation 5 devices, and to the TV through wireless capabilities of ARCHOS products. New partnerships with CANAL+ Group and TF1 Group (for their TF1 Vision services) in France, and CinemaNow in the United States will contribute to this content expansion and further ARCHOS awareness in additional markets.
  • Expand the geographical presence of ARCHOS while meeting the needs of brand partners in China, Italy, Spain and Scandinavia.
  • Establish product pricing that appeals to the mass market audience yet maintain strong margins for the company.  The new features of the Gen 5 PMPs will allow for new promotional opportunities including partial subsidies thanks to our growing list of special partners.

About ARCHOS

ARCHOS introduced the hard-drive-based MP3 player with the Jukebox 6000 in 2000, and since that time has revolutionized consumer electronics devices. The company invented the portable video player in 2003 and was the first to bring television recording, wireless and touch screens to the Portable Media Player. ARCHOS' award-winning products let consumers enjoy television, music, movies and photos anytime, anywhere. Established in 1988, ARCHOS has offices in the United States, Europe and Asia. ARCHOS is quoted on Compartment B of Euronext Paris, ISIN Code FR0000182479.

More information is available online at www.archos.com.


ARCHOS
Loïc Poirier

COO
email: poirier@archos.com
Tél. : 01 69 33 16 90
ACTUS
Nicole ROFFE

Investor Relations
Email: nroffe@actus.fr
Tél: 01 53 67 35 74
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