Pace stops making Freeview boxes

net1

Pace Micro Technology has announced it is quitting the Freeview set-top box market. The set-top box maker said profit margins on Freeview boxes were too low to justify remaining in the sector.

According to Pace, there are more than 18 Freeview set-top makers, each fighting for a slice of the fast-growing digital terrestrial hardware market. But rising take-up has also been accompanied by falling unit prices, squeezing manufacturers' margins.

Freeview boxes launched at around £100 but are now available at around half that price.

gameboy

Pace Micro reports four-fold profit increase


Pace Micro Technology raised the prospect of paying a dividend for the first time in three years yesterday as the manufacturer of set-top boxes reported a four-fold increase in half-year profits.

The news, coupled with hopes that Pace is close to clinching a crucial US contract, sent shares in the business up 10% to 40.75p, valuing it at £92.5m.

Just before Christmas, Pace warned that sales in the second half of its current financial year would be lower than expected, advice the company reiterated yesterday. But Pace, which has suffered many setbacks on its long road to recovery over the past three years, said it expects to be making better margins on its products later in the year.

Pace, which supplies broadcasters including BSkyB, Sky Italia and KDG in Germany, is hoping that lower component costs and sales of a number of new, higher margin products will help improve profitability.

In the six months to December 4 the company made a pretax profit of £3.1m, up from only £774,000 the previous year. But while sales of £150.5m were up almost 40% on the year before and the company shipped a record 2.1m set-top boxes, most of the sales involved lower margin "entry-level" decoders.

However, the chief executive, John Dyson, was upbeat about the company's prospects yesterday, saying he would not rule out Pace paying a final dividend, provided the company avoided further pitfalls.

"There's no cash reason not to pay a dividend," he said. "But I do see the need to have some cash available for looking at some ... other market segments."

Pace is also hopeful that its loss-making US business will soon become viable. It is close to a deal with the cable company Comcast that would see its new combined high-definition TV decoder and personal video recorder made available to Comcast's 22m households.

Pace Micro is also looking to increase outsourcing this year - doubling the 75 software engineers it already has in India. However, Mr Dyson said the company was not planning to cut any jobs among its 585 UK staff, who will concentrate on future product development. Pace is still awaiting the results of a Financial Services Authority inquiry into the five profit warnings it issued between September 2001 and July 2002, which saw its share price plunge.

Last year, the FSA said it would not be taking action against Mr Dyson and the former chief executive, Malcolm Miller. However, Pace still has a £1.5m provision against any potential FSA action.


Source: Guardian media

__________________

Only he who does nothing, does nothing wrong.

closetosoton

what are they going to make?