Letter from management

Dear Stakeholders,

The sharp global economic downturn was the primary factor impacting our financial results during the third quarter 2008. We felt the ripple effects of this slowdown on our top-line performance mainly in two of our key vertical markets – automobiles and alarms – which were impacted by the declining automotive marketplace and the slumping U.S. housing market that reduced demand for alarm systems. Due to the shortfall in revenues, we experienced a net loss in the third quarter, compared to a net profit in both the second quarter of 2008 and the third quarter of 2007.

In order to quickly return to profitability, our senior management team has already identified areas at the operating level for cost reduction that target future savings of between €12 and €16 million per year. This is an important step in realigning our cost structure with the current economic reality and our lower revenue base. This cost reduction plan remains subject to review by Wavecom’s workers’ council. The plan has already been implemented in the United States and in France, should take effect starting in the first half of 2009.

Even during this challenging period, our Wireless Microprocessor®, wireless central processing units, Q2686 and Q2687 began to gain traction in the marketplace. Our backlog also increased slightly from last quarter and our product gross margins remained strong and at levels we believe are the highest in the industry.

We fervently believe that machine to machine communication is a promising growth area and that Wavecom is uniquely positioned in the wireless M2M market with its wide range of wireless modules that function as wireless central processing units, hosting a robust software platform including remote device management capabilities. Our internal expertise in building subsystems such as telematics boxes for cars and trucks or wirelessly-connected alarm panels give us an additional advantage. As of today, we have built a strong and promising three-year pipeline which includes many promising new business opportunities.

Finally, on October 6, 2008 Wavecom became the target of an unsolicited tender offer by Gemalto, a leader in smart-card technology. After due and careful consideration, our Board of Directors reached the conclusion that the offer is not in the best interests of the Company, its shareholders and employees as it fails to value our unique position and prospects for growth. We are always interested in any transaction that benefits shareholders and other stakeholders, and our Board will carefully review and consider any proposed strategic transaction.

Further information on Wavecom’s Q3 results is available in the press release published by the Company on its website (www.wavecom.com) on October 22, 2008.


Ron Black
Wavecom Chief Executive Officer
November 14, 2008

This letter contains forward looking statements, within the meaning of the U.S. securities laws, including with respect to the future growth potential of the M2M market and Wavecom's product pipeline and future prospects. Risks, including those described in Wavecom's Annual Report on Form 20-F for the fiscal year ended December 31, 2007 filed with the U.S. Securities and Exchange Commission, and in particular market developments in the next three years, could cause actual results to differ materially from these statements.