Published on February 13, 2008
TO
      BUSINESS AND TECHNOLOGY EDITORS:
    SCM
      Microsystems Announces Expected Fourth Quarter 2007 Results Including Operating
      and Net Profit
    25%
      to
      35% Revenue Growth Forecast for 2008
    ISMANING,
      Germany, Feb. 13 /PRNewswire-FirstCall/ -- SCM Microsystems, Inc. (Nasdaq:
      SCMM,
      Prime Standard: SMY), a leading provider of solutions that open the Digital
      World, today announced expected results for the fourth quarter ended December
      31, 2007. Highlights of the 2007 fourth quarter are expected to
      include:
    | -- | Revenue
                above the high end of management's previous guidance of $7.5 million
                to $9.0 million; | 
| -- | Gross
                margin above management's previous guidance of 40%;
                 | 
| -- | Operating
                expenses at the low end of management's previous guidance of $4.0
                million to $4.5 million; and | 
| -- | GAAP
                operating and net profit. | 
Revenue
      from continuing operations in the fourth quarter of 2007 is expected to be
      between $9.1 million and $9.8 million, above previous guidance of $7.5 million
      to $9.0 million. The expected improvement in revenue for the 2007 fourth quarter
      versus previous guidance was due to additional sales of the Company's PC
      Security products for U.S. government security programs and larger orders of
      Flash Media Reader products from a major customer. Revenue for the fourth
      quarter of 2006 was $9.4 million.
    By
      product segment, fourth quarter 2007 PC Security revenue, which includes sales
      of smart card readers and other products for secure network and physical access,
      is expected to be approximately flat with sales of $7.3 million in the fourth
      quarter of 2006. Flash Media Reader revenue, which includes sales of OEM digital
      media reader technology, is expected to be up more than 10% compared with
      revenue of $2.1 million in the year ago quarter. 
    For
      the
      year as a whole, the Company expects that sales of its PC Security products
      will
      be up slightly in 2007 versus 2006, and that sales of its Flash Media Readers
      will be down significantly as a result of lower sales levels in the first half
      of 2007 due to the loss of a major customer, which higher sales in the second
      half of the year did not offset. The Company therefore expects total revenue
      for
      the year ended December 31, 2007 will be between $29.8 million and $30.5
      million, down 9% to 11% from revenue of $33.6 million for the year ended
      December 31, 2006, compared with management's previous guidance of 2007 revenue
      10% to 15% below 2006 levels. 
    "Sales
      and operational execution were both strong in the fourth quarter, resulting
      in
      expected positive operating and net income for the quarter," said Stephan
      Rohaly, chief financial officer of SCM Microsystems. "Our U.S. smart card reader
      business has remained healthy as government agencies continue to implement
      and
      expand card-based security programs. Sales of our digital media readers returned
      to levels not seen for over a year as one of two major customers experienced
      increased demand from their end markets. And revenue from our CHIPDRIVE(R)
      small
      office solutions exceeded $1 million for the first time, just months after
      expanding our sales activities across Europe. Higher sales further supported
      gross margin in the quarter, which has continued to strengthen over the past
      year due in part to ongoing product cost cutting measures."
    Gross
      margin in the fourth quarter of 2007 is expected to be above previous guidance
      of 40%, due both to higher than anticipated sales of the Company's digital
      media
      readers in the quarter and continued margin integrity in the Company's PC
      Security business. Gross margin in the fourth quarter of 2006 was
      42%.
    Operating
      expenses in the fourth quarter of 2007, as reported in accordance with GAAP,
      are
      expected to be at the low end of previous guidance of $4.0 million to $4.5
      million for the quarter. GAAP operating expenses were $3.3 million in the fourth
      quarter of 2006, which included amortization of intangibles and restructuring
      and other charges of $0.2 million. 
    As
      reported in accordance with GAAP, the Company expects to realize operating
      income for the fourth quarter of 2007 of breakeven to a small operating profit.
      GAAP operating income was $0.6 million in the fourth quarter of 2006.
    The
      Company further expects that, as in past quarters, interest income will have
      a
      positive effect on its financial results, and that as a result, the Company
      expects to record positive net income in the fourth quarter of 2007. Income
      from
      continuing operations for the same quarter of 2006, as reported in accordance
      with GAAP, was $0.7 million.
    The
      Company also expects cash and cash equivalents at December 31, 2007 will be
      down
      slightly compared with cash and cash equivalents of $33.1 million at September
      30, 2007.
    "SCM
      is
      focused on developing and delivering smart card readers and terminals to address
      some of the world's largest card-based security and identification programs
      --
      from electronic passports, to ehealth cards, to government-mandated PIV and
      CAC
      cards for U.S. Homeland Security," said Felix Marx, chief executive officer
      of
      SCM. "Over the last two quarters we have begun the process of defining a plan
      for accelerating growth -- a plan that includes broadening SCM's participation
      in the contactless and epayment markets. While it will take time to implement
      our growth plan, we believe we have already put in place much of what is
      required, with significant additions to our management team, enhanced sales
      resources and increased attention on strategic industry
      partnerships."
    Guidance
      for 2008 
    For
      the
      full year fiscal 2008, the Company expects revenue growth between 25% and 35%
      from expected 2007 levels, resulting in total revenue of $37 million to $41
      million. Gross margin, as reported in accordance with GAAP, is expected to
      be
      between 44% and 46% in 2008. The Company further expects operating expenses
      between $17 million and $20 million in 2008, including anticipated further
      investments in sales resources and development activities to address strategic
      growth initiatives. Within these ranges, the Company currently expects to record
      both operating and net profit for the year as a whole. 
    SCM
      has
      not yet completed the review of its results for the fourth quarter or full
      year
      of fiscal 2007 and the Company's auditors have not completed their audit of
      such
      results. Therefore the expected results set forth in this press release are
      based only on a preliminary review by the Company of its results for the fourth
      quarter. Accordingly, the Company's actual results may differ from those set
      forth herein. SCM expects to announce full results for its fourth quarter and
      fiscal year 2007 following the completion of its annual audit and the filing
      of
      the Company's Annual Report on Form 10-K with the SEC, which is due on or before
      March 31, 2008.
    About
      SCM
      Microsystems
    SCM
      Microsystems is a leading supplier of solutions that open the Digital World
      by
      enabling people to conveniently access digital content and services. The company
      develops, markets and sells the industry's broadest range of smart card reader
      technology for secure PC, network and physical access and digital media readers
      for transfer of digital content to OEM customers in the government, financial,
      enterprise, consumer electronics and photographic equipment markets worldwide.
      Global headquarters are in Ismaning, Germany. For additional information, visit
      the SCM Microsystems web site at http://www.scmmicro.com.
    NOTE:
      This press release contains forward-looking statements within the meaning of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. These include, without limitation,
      the statements by Felix Marx and Stephan Rohaly; our statements contained above
      regarding our expectations for the company's fourth quarter and fiscal year
      2007
      revenue, gross margin, operating expenses, interest income and cash and
      equivalents; and our statements contained above regarding our expectations
      for
      the company's fiscal year 2008 revenue growth, gross margin, operating expenses
      and expected operating and net income. These statements are based on current
      expectations or beliefs, as well as a number of preliminary assumptions about
      future events that are subject to risks and uncertainties that may cause actual
      results to differ materially from those contemplated herein. Our financial
      results may not meet expectations. Readers should not unduly rely on these
      forward-looking statements, which are not a guarantee of future performance
      and
      are subject to a number of risks and uncertainties, many of which are outside
      our control, that could cause our actual business and operating results to
      differ, including, but not limited to, our ability to grow market share and
      revenues based on a strategy of participating in specific early stage markets;
      our ability to successfully develop and introduce new products that satisfy
      the
      evolving and increasingly complex requirements of customers; the markets in
      which we participate or target may not grow, converge or standardize at
      anticipated rates or at all, including the government and enterprise security
      markets which we are targeting; we may not successfully compete in the markets
      in which we participate or target; competitors could take market share or create
      pricing pressure; and we may not be successful in maintaining operating expenses
      at current or lower levels. For a discussion of further risks and uncertainties
      related to our business, please refer to our public company reports filed with
      the U.S. Securities and Exchange Commission, including our Annual Report on
      Form
      10-K and our amended Annual Report on Form 10-K/A for the year ended December
      31, 2006, and the company's Quarterly Report on Form 10-Q for the quarter ended
      September 30, 2007.
    All
      trade
      names are trademarks or registered trademarks of their respective
      holders.
    SOURCE
      SCM Microsystems, Inc.
    -0-
      02/13/2008
    /CONTACT:
      Stephan Rohaly, Chief Financial Officer, +49 89 95 95 5101, srohaly@scmmicro.de,
      or Darby Dye, Investor Relations -- US, +1-510-249-4883, ddye@scmmicro.com,
      both
      of SCM Microsystems, Inc./
    /First
      Call Analyst: /
    /FCMN
      Contact: /
    /Web
      site: http://www.scmmicro.com /
    (SCMM)