Pace looking to new technologies to provide boost -

Pace looking to new technologies to provide boost

LONDON — Pace Micro Technology has seen both shipments of set-top boxes and revenue halved in the six months to 3 December compared with the same period the year before. STB shipments were 1.1million while revenue was £78.9million. The loss before tax and restructuring costs was £8.9million compared with a profit of £4.7million in 2004.

Pace Micro Technology's Chairman, Sir Michael Bett, said, “Revenues are expected to improve significantly during the second half through shipments to the U.S. as well as Premiere in Germany, UPC in The Netherlands, Foxtel in Australia and Sky New Zealand. This growth will be offset somewhat as in the U.K. we expect units and revenues to continue to decline in the short-term.”

On 16 December, the company revealed some short-term setbacks in new product introduction and some shipment delays due to industry-wide component shortages impacted the Group's performance. Pace says the shortfall of shipmments in November caused by shortage of components has been substantially made up, but component availability remains an issue in the short-term.

In the UK, which Pace says is a maturing market, STB shipments decreased to 0.4 million boxes (2004: 0.5m). BSkyB remained an important customer as its Sky+ PVR service continues to grow and there were ongoing shipments into UK cable. In continental Europe, Pace has worked with Premiere, Kabel Deutschland (KDG), Viasat and Sky Italia. Shipments were lower at 0.5m (2004: 1.9m), the reduction mainly due to the high level of boxes delivered to Sky Italia last year as part of its service launch.

For Premiere, Pace has recently launched a standard definition PVR and became the first supplier to deliver a certified set-top box for its high definition service. This set-top box is Europe's first to utilise the latest MPEG-4 compression technology, which enables more high definition channels to be delivered within existing available bandwidth.

Pace has commenced PVR shipments to Sky Italia and to Viasat in Scandinavia. It is developing its first set-top box for delivery to UPC (part of Liberty Global Inc) in The Netherlands following a contract win in June 2005.

In the U.S., Pace is now close to seeing a return on the investment made by the Group in this market over the last six years. This follows major contract wins with Comcast in May 2005 and DIRECTV in July 2005. Currently Pace is in the final development stages before delivery of the first products on both of these contracts.

Pace's shipments to North America during the period increased slightly to 99,000 units (2004: 75,000) and includes shipments to Rogers Cable and Videotron, Canadian cable operators.

The contracts Pace is currently working on reflect the important strategic moves taken by the Group over the last eighteen months to expand its worldwide customer base and shift the balance of shipments towards more advanced products for major payTV operators.

Products and technologies currently under development include high definition, multiroom, home networking, mobile, a solution to improve satellite signal distribution around apartment and similar buildings, bandwidth enhancements for cable operators, software to enable Open Cable in the U.S. and devices that allow content to be delivered via broadband in the home.

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