Gemalto's smart move

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Gemalto's smart move

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A change in the listing of top French shares as smart card maker Gemalto is set to join the CAC 40, replacing the struggling telecommunications equipment maker Alcatel Lucent.

The move will raise the profile of Gemalto, which posted two billion euros in revenue last year from sales of secure chips and software for credit cards, mobile phones and biometric passports.

Chief executive Olivier Piou said: “If you have a mobile phone, a credit card or an electronic passport there is about a one in two chance that it is includes a Gemalto product. It is estimated that about half the people on earth are carrying something from Gemalto in their pocket.”

Just as Alcatel Lucent fell prey to low-cost Chinese competitors, Gemalto is under threat from Chinese chipmakers. That is why it has diversified away from its once core activity of making SIM cards for mobile phones into the security business, with a focus on so-called identity management and payment technologies.

Gemalto’s shares have nearly doubled in value this year and analysts say it makes sense for it to replace Alcatel on the CAC 40 given they were both technology stocks.

As one trader said: “Gemalto is in a promising sector and has a leadership position in several areas, unlike Alcatel.”

Euronews Paris business correspondent Giovanni Magi commented “With France in need of companies that are more competitive, those that stand out in terms of innovation are set to lead the country’s economic recovery.”