Pace Micro Technology, the UK set top maker has had some year in the US, and although it did say a few weeks back that its result would be ahead of expectation, that perhaps didn’t extend to a 77% increase in devices shipped, a doubling of revenue to £386.5 million ($797 million), a dramatic return to profit, with shipments in the North America increasing six-fold to 1.2 million units, making the Americas 50% of the entire business by revenue.
Pace has long been quietly trying to become, if not a US company, then a US friendly one, and has begun shipping in volume in deals with both Comcast and DirecTV, and has now signed a total of 30 cable operators there, each with continuing commitments. Long term critics had steered Pac away from the US, with its long sales cycles and tough trading conditions, but it looks like Pace is finally getting its message through.
Overall shipments were 3.9 million set-tops against 2.2 million, last year and the revenue hike has come from increased demand for high definition devices and DVRs.
Pace profit before tax and exceptional items of £6 million (around $12 million EBITDA) after a loss during 2006 of £15.6 million and part of its success was put down to a restructuring exercise that it went through during 2006 when for the first time it established Customer Account Teams, responsible for all aspects of the customer relationship, including product development. Pace says that as a result, product execution is better, quality is increasing and margins are improving and the full benefits will flow through during the next 12 months.
Pace delivered HD MPEG-4 Digital Video Recorders to DirecTV and its standard definition DVR to Comcast and launched its CableCARD range, ahead of regulatory changes in the US.
Because there has been a shift to HD and the DVR, average selling prices of devices have risen from £81 ($162) to £100 ($200). However gross margins were down to reflect the fact that more of its business was carried out in the price competitive US market and that these products are, of course, expensive to make.
Pace shipments into the EMEA (Europea Middle East Africa) region increased by 37% to 2.2 million set-tops, with strong shipments at BSkyB, Sky Italia, Viasat and UPC and Pace is still clearly weak in Asia Pacific where shipments increased only slightly to 432,000, with much of that coming from Australia and New Zealand with Foxtel, Optus and Sky New Zealand.