Pace loses £16m but sees 'modest' recovery ahead

The set-top box maker Pace Micro Technology yesterday announced plans to axe another 50 jobs as it plunged into the red in the first half of the year.

But the company, which was forced to cut 200 jobs last year after issuing five profit warnings, signalled the worst is now behind it. Pace predicted a "modest" recovery in the second half of its year.

Andrew Wallace, Pace's marketing director, said: "We think that the market will grow modestly this [financial] year. Most other commentators believe it will grow more strongly, so we are relatively bearish."

In the meantime, in an effort to cut costs further, he said another 50 jobs would go across the board, reducing the company's workforce to about 700.

The move came as the company announced a pre-tax loss of £16.4m in the 26 weeks to 30 November compared with a £20.9m profit in the same period a year before. The company also scrapped its half-year dividend.

"Pace and its competitors have experienced difficulties as deployment of set-top boxes around the world has fallen," the company said.

Sales slumped by 61 per cent to £83.4m in the first half, hit by the turmoil in the UK market where customers such as the cable companies NTL and Telewest cut their spending and where BSkyB renegotiated a key contract.

The figures were, however, in line with most analysts' forecasts following the company's most recent profit warning in late November.

Pace also said yesterday that finance director John Dyson had been appointed acting chief executive until a successor for Malcolm Miller, who left at the start of the year to head up a private technology company, had been found.

Despite the more upbeat tone, analysts at Schroder Salomon Smith Barney said they had concerns about the company's financial stability and set a target price of 10p a share. Stock in Pace closed up 0.25p at 17.75p last night.

In the company's defence, Mr Wallace highlighted Pace's cash position, which stood at £15.3m at the end of November, and its untapped banking facilities. "This is a tough market. What we've made sure is that we've reduced our stocks by some way. We've got strong cash and we've got booked orders, so we're very focused at present on making sure we're the survivors," he said.