Pace has issued its third profits warning of 2011 after the set-top developer announced that floods at hard driver supplier Western Digital’s Bang Pa-In facility in Bangkok would hit shipments through until the end of the year.
“Because Western Digital is the major supplier of hard disk drives to Pace, this will negatively impact expected shipments of products with hard disk drives from this supplier during the remainder of this year,” the company said in a statement. It added operating profit is likely to fall below the $150 million (€109.1 million) to $170 million range.
Shares fell to a 52-week low before recovering slightly to 82.35p in early morning trading on Friday, some distance from the 233.90p 12-month high.
In March it emerged that a US provider had delayed an order by 12 months into 2012, effectively skipping a generation of technology. Two months later the Japanese Tsunami led to problems within the supply chain.
IHS Screen Digest estimates Pace to have been the number one set-top supplier in terms of shipments during 2010, a crown that by now must be in danger of slipping.
In a related development, Western Digital has announced that production of hard drives in its facilities close to Bangkok, Thailand, will be constrained in the current quarter due to the severe flooding, which is causing problems with the region’s infrastructure, including transportation and utilities, and has resulted in the inundation of some supplier facilities and employee homes. The company also said that its approximately 37,000 Thailand-based employees are deemed safe at this time.
The company is working with its suppliers to maximise throughput and availability of parts in order to best meet the needs of its customers. In the quarter ending July 1, 2011, WD shipped approximately 54 million hard drives from its facilities in Thailand and Malaysia, with approximately 60% coming from its Thailand sites. The company’s Thailand operations source much of its supply of components from local suppliers.
While WD’s facilities in Thailand are operational, production has been suspended on a temporary basis to protect its employees and its facilities and equipment against water ingress. The company indicated that conditions associated with the continued flooding are evolving quickly and the extent of the impact on its operations in Thailand cannot yet be fully determined.