ARCHOS

ARCHOS recorded revenues of 101.8 M€ for the period of January to December 2007 compared to 124.3 M€ for the same period in 2006, an 18 % decrease.

In 2007, in a market of MP3 and multimedia players globally in recession, the company was pressured to reduce prices in the 1st half of the year in order to liquidate its stocks of Generations 3 and 4 Portable Multimedia Players (2005/2006 products respectively) before being able to introduce its Generation 5 in the second half of the year.

In the second half of the year, ARCHOS saw a strong increase in demand for WiFi Portable Multimedia Players due to the introduction of the new iPod in October; this, in detriment to non-connected mid-range Portable Media Players. This situation created a sudden imbalance between production and demand that the company was not able to adjust for due to the 3 month manufacturing cycle and additionally a critical shortage of components, especially on LCD screens for the ARCHOS 705 WiFi, translated to a negative operational result of about 3M€ for the second half of the year.

The Generation 5 products are available for retail worldwide and the previous generation products are no longer in the distribution channel.

By opening ARCHOS Media Club at year-end in France (soon to be offered Europe-wide and in the United States), the company has made a decisive step by combining the sale of Portable Multimedia with a video-on-demand service.

ARCHOS confirms its strategic orientation which consists of:

• Becoming the market leader in Internet-enabled multimedia devices
• Embracing the new Internet access technologies, in particular the 3.5G (HSDPA) through partnerships with mobile telephone operators.
• Developing a range of ‘on-device’ services to include entertainment and leisure: Films, TV, games, radio, music, social networking, geo-localisation, and more.

ARCHOS has positioned itself as an alternative solution to Apple in the WiFi Portable Multimedia Player arena. That is, the over 200€ range of hard drive Portable Multimedia Players. The traditional competition in this area has thus found itself boxed into the under 100€ market due to the preeminent place of the iPod Nano in the mid-level. The Press is pretty much in agreement that the technology leader Archos is the Apple challenger.

The revenue and the orders during the current Q1 are reassuring and confirm this tendency. Benefiting from a net cash position of 15M€ and its equity of more than 40M€, ARCHOS will continue its development in 2008 without disturbance.

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 introduced the portable video player in 2003 and was the first to bring TV recording, wireless and touch screens to the portable media player. ARCHOS’ award-winning products let consumers enjoy movies, photos, video, music and television anytime, anywhere. Established in 1988, ARCHOS has offices in the United States, Europe and Asia, and is quoted on Compartment B of Euronext Paris, ISIN Code FR0000182479. More information is available online at www.archos.com .

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