To make the point that if you are in the STB business you are in the ‘box business’, I was going to headline this piece ‘BS and basics in the brown goods business’, but I figured there were probably too few people out there who now remember that’s what we used to call all the home entertainment stuff we persuade consumers to put in their homes.
Maybe we should go back to that most prosaic of sector monikers to remind some they are in the box business, they are not primarily (or much at all) media businesses, ideas factories, or New Age service companies somewhere up in ‘the Cloud’.
Pace has lost its CEO today (December 14th), a victim of a share price that has swung from over 200p to under 40p in a year (it’s around 70p now). The Pace share price has always swung so much that some foreigners apparently think the company’s full name is ‘volatile market performer Pace’.
This year’s swings have been in part down to the natural disasters in Japan and Thailand and Neil Gaydon, a 16-year veteran who does actually know the box business backwards, will rightly feel he is a victim of circumstance beyond his control.
But the company’s failure to communicate the timing issues related to major American orders, which overwhelmed otherwise OK results, was a blunder. It hurt more than it should have done because the City has never really trusted Pace – it did come to market with a giant-sized over promise – and never really understood it. That is partly because the City doesn’t get manufacturing (an old story, but true) and partly because Pace insists on over elaborating, over complicating and over glamourising its story. It makes boxes and does it well. It’s taken over others that do it less well and made them better. It has won #1 or #2 position worldwide depending on how you count, and achieved well over £1 billion in sales. Where – exactly – has it all gone wrong…….?
Allan Leighton – something of a City poster boy – was appointed chairman in the summer and has, presumably, had a major hand in the departure of Gaydon. Leighton has a long non-exec CV (though he tends to be a pretty hands-on NED), that includes the Post Office, lastminute.com and Leeds United football club.
He launched a strategic review of the business, the results of which, broadly, are that Pace needs to become more of a services company – a re-versioning of the IBM move away from PCs to services. At least I think that’s the case – I’ve had the new strategy explained to me but found it pretty mystifying.
When Leighton announced the review, Ian Robertson at Seymour Pierce said he hoped he would check the bathwater for babies before chucking it out. Today Robertson pronounced himself unimpressed with the review, and hoped for a more pragmatic approach from Mike Pulli the successor who is being brought back from the US.
More brown goods, less BS, please.