Advanced Television

Pace stock tumbles on wary market

March 8, 2011

By Chris Forrester

Despite delivering a near-perfect set of “strong” numbers (see separate story), UK-based TV technology company Pace failed to convince investors with their results (to December 31st 2010) and general outlook.

Pace’s share price tumbled 36.5p (14 per cent) to 183p during March 8th, a five-week low point and the largest fall on the UK’s important mid-cap index. Pace is the world’s largest supplier of set-top boxes to broadcasters.

Insiders suggest that some stock market traders were busy ‘shorting’ Pace stock. Pace’s 52-week high was 231.8p.

One setback, reported by CEO Neil Gaydon, was the slippage of a major US set-top box order out of 2011’s prospects and into 2012 as the “major” client decided to leap-frog current technology and go for a ‘next generation’ solution that was also good for internet access and new services. Gaydon told analysts that the decision was good for the industry and reflected the pay-TV operators wish to embrace new technology.

This year’s numbers will be broadly around the same level as 2010, helped by strong growth in Latin America, the Mid-East and India.”We see pay-TV continuing to do very well, while managed services will also grow,” said Gaydon, adding that mainland Europe could also be expected to grow especially in those markets where pay-TV subscription was still in single figures.

RBS, in its note to investors, said the results were higher than they had expected, reflecting a solid year of growth and progress in strategic acquisitions, but the revenue outlook was “marginally lower than our expectations due to deferrals at one specific customer and implies flat revenues in the core business”.

Another report, from stockbroker Altium Securities, also saw negativity for the year ahead and would be lowering the company’s profit forecasts by six per cent because of Pace’s “weak” outlook.

Gaydon, talking exclusively to Advanced Television, said TataSky was the new major Indian client and already taking Pace’s HD- PVR unit. Boxes started shipping to TataSky last November. Gaydon was also looking to see conditional access supplier Latens, acquired last November in a £28 million deal, starting to kick in this year with a number of Tier 2 and Tier 3 telcos looking at Latens’ CA solutions and especially in India where the cable industry was migrating from analogue to digital. He did not expect Latens to be encroaching on the world’s leading CA suppliers.

Gaydon also spoke enthusiastically about YouView’s prospects going forward. Pace is the sole supplier to BT Vision, an increasingly important supplier of UK broadband and hybrid video services.

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