Slower sales of receivers send Pace tumbling

Slower sales of digital satellite receivers and the adverse effect of the strength of sterling on profits sent shares in Pace Micro Technology into free fall yesterday. The shares lost 25 per cent of their value to close at 169.5p, below the issue price of 172p when the company came to the stock market last June.

The City was further disappointed when Pace gave no news on the possible contract with BSkyB to make set-top boxes for digital television. Pace is one of several bidders including Panasonic and Nokia which have made bids for the potentially lucrative contracts.

Pace said digital satellite receiver shipments were lower in the six months to January than in the previous half-year. This was due to slower growth rates being achieved by broadcasters as digital markets developed world-wide. The company said it expected to reach its original budget for the year but did not anticipate any overperformance from new contracts.

Brokers dramatically reduced their full-year forecasts with Credit Lyonnais cutting from pounds 26m to pounds 20.5m.

Commenting on the bid to win the set-top box contract, Mike Styles of Credit Lyonnais Laing said: "It's going to be a bruising battle against the biggest players in the industry such as Goldstar, Nokia and Panasonic. It is essential Pace secures the deal in its home market and gets the BSkyB endorsement for its technology."

Barry Rubery, Pace's managing director, said he was confident Pace would win contracts to provide up to half of the million decoders BSkyB was expected to order: "I would be surprised if we weren't a supplier. We've been developing the product semi-speculatively for the past six months and we're close to Sky as we provide the majority of analogue decoders."

He said it was a case of "when, not if" the company would benefit from the digital revolution in television. The company announced a big contract yesterday with General Instruments to develop and sell digital cable technology in the US. Pace's profits in the six months to November increased to pounds 10.2m from pounds 400,000 last year. Sales were almost double at pounds 117m.

Investment column, page 20

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