March 8, 2011 / 7:57 AM / 9 years ago

UPDATE 3-Pace shares plummet as TV box customer delays order

* FY core earnings up 36 pct to 103.6 mln stg

* Revenue up 17.4 pct to 1.33 bln stg

* Sees 2011 revenue growth around same level

* Shares down 14 pct

(Rewrites lead, adds more from CEO, updates shares)

By Paul Sandle

LONDON, March 8 (Reuters) - Britain’s Pace Plc PIC.L, the world’s biggest maker of set-top boxes, said a U.S. customer was delaying a big order to 2012, reducing its 2011 sales growth and wiping some 100 million pounds ($162 million) off its stock market value.

The setback overshadowed strong underlying profit growth and an upbeat longer-term outlook, sending Pace shares more than 15 percent lower as it set an outlook for revenue growth of around the same level as the 17 percent seen in 2010.

“One customer on a specific project decided to accelerate a new piece of technology, which meant the revenue from that client has shifted from 2011 to 2012,” Chief Executive Neil Gaydon told reporters.

He said the U.S. customer had decided to skip a generation of technology in its home DVR (digital video recorder) product, but “the good news is we are improving profitability so we are on track to achieve our earnings despite this.”

Shares in the group were trading 14 percent lower at 190.4 pence by 1130 GMT, the biggest faller on the UK mid-cap index .FTMC, after dropping as low as 185p, their lowest since late January.

Adjsted core earnings rose 36 percent in 2010 to 103.6 million pounds after it shipped 22.2 million devices for cable, satellite and IPTV customers such as Comcast (CMCSA.O), DirecTV DTV.O and AT&T (T.N).

Sales rose 17.4 percent to 1.33 billion pounds.

GROWING COMPLEXITY

Analysts at RBS said the results were higher than they had expected, reflecting a solid year of growth and progress in strategic acquisitions, but the revenue outlook was “marginally lower than our expectations due to deferrals at one specific customer and implies flat revenues in the core business”.

Pace, based in Yorkshire, northern England, said pretax profit nudged up 1.7 percent to 71.1 million pounds after 19 million pounds of exceptional costs.

Pace, which competes with Motorola (MSI.N), said it believed the growing complexity and inter-dependency of pay TV and broadband services would drive demand for the group’s services in the year ahead.

Gaydon told Reuters said regions were moving to new technologies at different rates. “In traditional set-top boxes and gateways ... the likes of South America only launched high definition last year for the first time and DVR penetration was virtually nil,” he said. “There’s a ton of business going on down there.”

In North America, companies like Google (GOOG.O), Apple (AAPL.O) and Netflix (NFLX.O) were battling to gain a head start in the emerging IPTV market, whereby content is delivered over the Internet and watched on big TV screens, he said.

“One of the reasons for this delay in revenue this year is one of the big customers who is pulling forward their whole-home DVR product, and (is thinking about) whether it’s integrating Internet into that as well,” he said in an interview.

The group said it would pay a final dividend of 1.45 pence per share to give a total for the year of 2.175p, an increase of 45 percent. (Editing by Andrew Callus and David Holmes) ($1=.6184 Pound)

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