GEMPLUS ADJUSTMENTS

After a weekend meeting in London, Gemplus is reportedly near the
execution of a plan to cut more than 1,000 jobs after posting a third
quarter net loss of nearly $40 million. The company is also looking to
patch up discord among its board members and management staff. Major
shareholder, Texas Pacific Group, is pushing for new board members against
the blessing of other shareholders including Dassault family and Gemplus
founder Marc Lassus. Lassus recently agreed to sell his shares in Gemplus
to Groupe SAGEM. With this purchase, Sagem will own about 10% of the
capital of Gemplus. The weekend also meeting also challenged the new
leadersip of CEO Alex Mandl. Gemplus hired Mandl on September 9th. Mandl
was the former Chairman/CEO of Teligent between 1996 and 2001, following a
four stint at AT&T, where worked his way up to President/COO. There was
some controversy between Gemplus board members over the selection of Mandl.
The debate centered on Mandl’s previous ties with the Central Intelligence
Agency. Mandl belonged to the board of trustees of In-Q-Tel, a nonprofit
organization set up by the CIA in late 1999. In-Q-Tel’s purpose was to keep
track of Internet technology on behalf of the CIA. Some board members were
concerned that Mandl’s CIA ties could affect its ability to sell its
product and services to some countries. Dow Jones reports that Mandl may be
considering a salary reduction to appease shareholders.