Pace lowers its sights on sales

PACE Micro reined in its full-year sales forecasts as prices for its digital television set-top boxes tumbled and markets in Europe took a breather from their previous heady growth.

Chief executive Malcolm Miller said Pace has decided to lead a price war that has seen box prices fall by an average 12% and would continue its discounting strategy to win 15% of the US market within two years. Despite a 17% rise in shipments, falling box prices pegged half-year sales growth to 1 December to 4.9% to a total £216m and Pace warned annual revenues would be 'broadly similar' to last year's £524m.

The boxes are capable of providing an array of services including interactive television, high speed internet, content-on-demand and home shopping.

Miller said American shipments would help substantial sales growth return in the year to June 2003 but growth would fall short of historic levels of between 35% and 40% levels. However, outsourcing box manufacturing and servicing helped widen margins and pre-tax profits rose 17% to £20.9m.

Credit extended to cable operators pushed debts up 34% to £134m as Pace relaxed terms to some cash-strapped customers. Miller said 90% of the amount owed was insured. The half-year dividend is up 14% to 0.4p and earnings per share rise 27% to 6.62p.