Pace shows resilience in face of internet TV threat

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SET-TOP box maker Pace said the cable TV market remains resilient despite the tough economy and the threat from internet TV, helping its second-half revenues rise.

The Saltaire-based group, the world’s biggest maker of set-top boxes, added it is making “good progress” on its strategic plan, aimed at modernising and restructuring the group after a series of profit warnings.

“We continue to make good progress in executing our strategy and becoming a more profitable, cash-generative company with a broader commercial opportunity,” said chief executive Mike Pulli.

Pace said the outlook for the rest of the year has improved, with revenues for 2012 now expected to be flat on 2011.

It added disruption to its supply chain – when key hard disk drive suppliers were brought to a standstill a year ago by flooding in Thailand – has not hurt underlying earnings in its second half, compared with a previous $4m anticipated hit.

Operating margin in 2012 will be higher than seven per cent it added, before the impact of supply disruptions. It expects net debt to end the year below $200m.

Despite warnings about the cable TV market being eclipsed by internet TV market entrants, such as the NetFlix film service and Apple TV, Pace said: “The PayTV market continues to show resilience despite the uncertain economic conditions and previously feared disruptive threats from new over-the-top (OTT) market entrants.

“Our major customers have performed well with sustained consumer demand and strong profitability.”

Pace has prioritised expanding into software, services and integrated solutions. It said operators’ need to support increasingly complex home networks is driving strong demand for its systems and software, with contract wins in Europe and Asia Pacific.

Mr Pulli added: “We have made significant steps in transforming our supply chain and the continued focus on operational improvement will deliver further operational savings in 2013... We are confident about our trajectory.”