Pace issues new profit warning

 
Steve Dinneen
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INVESTORS changed the channel on set top box-maker Pace yesterday after it admitted its business is still reeling from the Thai floods.

Its shares tanked more than 24 per cent, after the firm said it now expects operating profits of just £89.5m – far lower than its already downgraded forecast of at least £95m.

The fall has been caused by a shortage of the hard disk drives vital to its set top boxes. Pace added that the problems will persist into next year, with the firm bracing itself for a hit of up to £32m on 2012 operating profit.

The update caps off a torrid year for Pace, with the Japanese tsunami in March smashing its supply chain, leading to a series of huge share price drops.

The company had already lost 20 per cent of its market value in March after it announced that a customer had delayed a major US contract.

It has now lost almost 80 per cent of its value since its year-high in February.

Colins Stewart analyst Jonathan Imlah said: “Set top boxes will remain relevant for many years and Pace will continue to lead the way... But the company is clearly up against it in the short term.”

Pace is now seeking to cut costs in its European business by around £4.4m.

This latest blow has also reignited speculation amongst analysts that Pace could emerge as a potential takeover target.