TV hardware maker Pace posts leap in profits under new chief

SET TOP TV box maker Pace enjoyed a bumper 2012 despite missing out in an effort to buy Google’s TV box arm, as the firm’s pre-tax profits rose by 46 per cent following a management shakeup.

The year was chief executive Mike Pulli’s first in charge after former boss Neil Gaydon had quit in December 2011 following a string of profit warnings. Since Pulli took the reins, Pace has seen the benefits of a resurgent US pay-TV market, and the company’s share price has more than trebled.

The American has led a strategic transformation plan, which has seen costs reduced and the supply chain tightened up. “We have made good headway on executing our strategy and Pace is becoming a more profitable, cash generative company,” he said.

Yesterday, Pace said revenues had risen 4.1 per cent to $2.4bn (£1.6bn) in 2012, while profits were up from $54.7bn to $80m.

The company supplies the US’s top pay-TV operators Comcast, DirecTV and AT&T, and has sold more boxes this year as subscribers upgrade to more advanced hardware with larger disks and internet connectivity. Although Pace sells around the world, the US is its key market, due to its 110m pay-TV subscribers.

The company will face increasing competition, however, by rival Arris’s $2.35bn deal to buy Motorola Home – the set top box maker previously owned by Google.

Pace missing out had disappointed investors since it will create a much bigger company with greater resources.

Google had inherited Motorola Home when it bought Motorola Mobility – best known for making phones – for $12.5bn last summer.

Pace shares rose yesterday despite the company saying revenue would be flat going into 2013.

Analysts at Numis warned yesterday that Pace could be hit by Apple entering its space. The iPhone maker has long been rumoured to be developing a TV unit.