Pace defies technology downturn

Pace boxes provide access to ONdigital and Sky

Television set-top box maker Pace Micro Technology has unveiled a 61% rise in profits, lifting some of the gloom surrounding a technology sector hit by a series of profits warnings.

Pace Micro said underlying pre-tax profits hit £44.3m in the 12 months to 2 June, compared with £27.6m a year before, thanks largely to a rise of one quarter in UK sales.

Several research organisations predict that digital TV will be the single most important online information device in the home by 2005

Pace Micro Technology

And the company, which has signed deals with US giants such as Microsoft, Time Warner and Comcast, predicts global expansion will continue to support future profitability.

"Whilst the UK will continue to be a firm foundation from which to build, additional growth is expected to come from the US and mainland European markets," Pace said.

The announcement offers hope to investors in technology firms who have seen their shares plummet again in recent days thanks to profits warnings from the likes of the UK's Marconi and California-based Advanced Micro Devices.

And it helped Pace shares, which have proved among the more resilient in the tech sector, rise 9% in morning trade.

More growth to come

Pace predicted that about 34 million set-top boxes would be installed this year, compared with an above-forecast 28 million in 2000, as the switch to digital TV services gains pace.

And the total number of set-top boxes installed in homes is set to rise from 100 million last year to 400 million by 2005, Monday's statement said.

Yet the population of digital TV viewers is still small, considering that television is watched in 1.2 billion homes worldwide, Pace said.

The firm also predicted the growth in non-TV services, such as the internet, which can be provided via digital TV would also underpin growth in the marketplace.

"We are still only at the beginning of providing digital TV and interactive services," the company said.

"The TV will be as important as PCs and mobile phones are today for information and interactive services.

"Several research organisations predict that digital TV will be the single most important online information device in the home by 2005."

New technology

The firm also highlighted the gain, with the purchase in February of French rival Xcom Multimedia, of technology allowing conventional TVs to be converted at low-cost to accept digital transmissions.

"[The technology] may be used to facilitate the switch to digital television in countries where governments have stated aims to switch-off analogue television services," Monday's briefing said.

The company also revealed its engineers had filed 75 patents applications relevant to the digital TV market, almost doubling the firm's patent tally.

"This success in increasing the number of patent applications is the result of a reward and recognition scheme that encourages innovation," the statement said.

Pace shares, which hit 345p on Monday morning, ended the day up 21.5p, or 6.8%, at 337.5p.

The shares topped 1240p in March 2000, at the height of the boom in interest in technology firms.