North America picks up the Pace - Embedded.com

North America picks up the Pace

LONDON — Digital TV developer, Pace Micro Technology plc has seen a shift in the balance of its global shipments with over half the group’s revenues now coming from the North American market. Shipments into the Americas increased six-fold to 1.2million units in the latest financial year.

Pace (Saltaire,England) has returned to profit in its latest financial year which ended June 2, 2007. Profit before tax and exceptional items was £6.1million (about $12.5million) compared to a loss of £15.6million (about $32million) in the same period last year. Revenues have more than doubled to £386.5million (about $797million) up from £178.1million (about $376million).

Pace says a business restructure that took place in 2006 has improved product execution with quality increasing and margins are improving. The full benefits are expected over the next 12 months as these improvements work through the typical set-top box development cycle.

Pace has commenced new product shipments to DirecTV and Comcast in the U.S., with delivery of its high definition (HD) MPEG-4 personal video recorder (PVR) to DirecTV and its standard definition (SD) PVR to Comcast. The group also now has over 30 North American cable customers, selling a broad range of SD and HD products and has launched its CableCARD range, anticipating regulatory changes in the U.S. market.

Worldwide shipments increased by 77 percent to 3.9million set-top boxes with average selling prices rising from £81 (about $167) to £100 (about $206), reflecting the growing demand for higher specification products such as HD PVR.

While gross margin improved from 15.3 percent in the first half to 16.6 percent in the second half, the full year outcome was lower than last year's 18 percent at 15.9 percent. This was a due to some high volume products, in particular for the U.S. market, with lower margins. In addition, Pace says the full benefit of the improvements to product design and operations have not impacted some of the older and less cost-efficient designs still in production.

Pace has signed a deal with Digiturk, a major Turkish operator, that will introduce a HD PVR towards the end of 2007. The product range being developed for Digiturk introduces a new technical integration challenge through its use of the Irdeto conditional access platform and OpenTV middleware. The Group expects that a number of other payTV operators in this region will want to utilise a similar combined solution.

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