The slow pace of change

Pace, which manufactures boxes to allow televisions to receive digital pictures through their aerials as well as selling to troubled cable firms NTL and Telewest, issued five profit warnings last year as it suffered from the continuing difficult trading conditions. The firm also produces the Sky+ digital recorder boxes for BSkyB at a loss in return for a share in future service revenue.

The company currently expects to see a loss of around £16m for the six months to 30 November on sales of around #80m, down from original estimates of a £9m loss on £90m sales. Shares in the company are currently trading at below 20p, a far cry from the heady days of the internet boom when a Pace share was valued at £12.45.

The company has embarked on a cost cutting exercise which included the loss of around 180 of its 800 workers and a reduction in overheads of £15m a year. Pace has not however ruled out further reductions in staff and costs if they are necessary.

The company recently lost its leading figure, former chief executive Malcolm Miller, who joined boat electronics maker Raymarine Group at the turn of the year. In the absence of a replacement, finance director John Dyson is taking over the role until a successor is found.

But while prospects for today’s results may not excite investors, the company may well improve in the second half of the year. It has benefited from a massive campaign by the BBC for its new Freeview digital TV service, which requires a set-top box. According to marketing director Andrew Wallace, demand for these boxes in-store has gone up five-fold since the campaign began.

The company is hoping that as more and more digital services become available, larger numbers of customers will start switching to the digital service, and this could help pull the company out of its current rut.

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