(Adds CEO and analyst comments, background; updates shares)
By Abhirup Roy
March 4 British TV decoder maker Pace Plc
posted a 22.5 percent rise in full-year core earnings,
driven by soaring demand for its next-generation media servers
in North America, and the company forecast 2014 revenue above
Shares in Pace rose as much as 11 percent on Tuesday, making
the stock one of the top percentage gainers on FTSE-250 Midcap
Pace, whose customers include Comcast Corp, AT&T
Inc and DirecTV, said it expected revenue of about
$2.70 billion this year, with an operating margin of around 8.5
Analysts on average were expecting 2014 revenue of $2.60
billion, according to Thomson Reuters I/B/E/S.
Pace has seen a significant rise in earnings over the past
18 months as more consumers in North America look to share
content between multiple devices.
Media servers connect TV and internet broadband content with
any screen at customers' homes, including smartphones, laptops,
set-top boxes and tablets.
"Because of this pressure of trying to gather more
consumers, everyone (Pace's customers) is moving very very
quickly around technology, and I don't see this slowing down for
the next couple of years," Chief Executive Mike Pulli told
The global market for set-top boxes totalled $4.6 billion in
the fourth quarter of 2012, market research firm Infonetics
Research said in a report in April. This market is expected to
grow to $26 billion by 2017. (link.reuters.com/fax37v)
Pace replaced Cisco Systems Inc as the leader of
the global set-top box market by revenue in the second quarter
of 2013, Infonetics said in another report last October. (link.reuters.com/byw37v)
Pace said adjusted earnings before interest, tax, and
amortisation (EBITA) rose to $193.6 million for the year ended
Dec. 31 from $158.1 million, a year earlier.
Revenue increased 2.7 percent to $2.47 billion.
Revenue in North America, which accounts for more than 60
percent of the company's total revenue, rose 16.9 percent.
Pace said in January that it expected adjusted EBITA to rise
to at least $190 million, on revenue of $2.46 billion.
The Yorkshire, Northern England-based company had raised its
full-year forecast in July after first-half profit more than
Operating margin rose 1.2 percentage points to 7.8 percent.
Barclays raised its rating on Pace's stock last month,
saying it expected the company's margins to grow more than 10
percent, helped by the acquisition of U.S.-based network gear
maker Aurora Networks Inc in October.
Pace bought Aurora for $310 million in a bid to diversify
the products it provides to cable customers.
"Acquisitions won't stop there - we expect them to do more
of the same on a near annual basis," Jefferies analyst Lee
Simpson wrote in a note.
Pace said it could look at regions such as eastern Europe,
India, the Middle East and Africa for expansion.
The company raised its final dividend by 20 percent to 3.66
cents per share, taking full-year dividend to 5.49 cents.
Pace's shares, which had risen 77 percent in the year to
Monday's close, touched a high of 446.9 pence on Tuesday.
The stock was up 8.3 percent at 437 pence at 1234 GMT on the
London Stock Exchange.
(Editing by Gopakumar Warrier and Kirti Pandey)