Pace says it expects the cost of continued hard drive supply problems to cost it between $25 million and $35 million (€18 – €26m) in the next 12 months. Pulli also gave an insight into the company’s failed attempts to win the UPC Horizon project.
In its annual financial statement the set-top box developer grew revenues by 11.9% to $2,309.3m, entirely on the back of the three acquisitions (2Wire, Bewan and Latens) made in 2010, and impacted by a loss of $9 million from the continued disruption to supplies of hard disk drives, caused by last years Thailand floods. In all Pace lost $36m in revenues from orders that could not be fulfilled because of the inability to source hard drives.
The company said it expected lost shipments to weigh heavily on the first half if 2012, but additional suppliers have now been brought on, and the uncertainty was clearing.
Adjusted EBITA of $141.4 was in line with management guidance.
“It’s no secret we’ve had a pretty challenging year, and it’s led us as I’ve told all our employees is to get back to basics, and that means making money,” said recently appointed CEO Mike Pulli. “There’s been a marked change in how employees react to the management and how we react to them.”
Pulli said that Europe was high on his radar, and while the company did really well in Western Europe, this was not the same in Eastern Europe. “Everybody watches TV, they may be watching more broadcast, they may be watching more freeview, but there’s a device in there somewhere, and between all the expertise we have around wireless and device management there has to be pieces we can pick up.”
Giving the example of UPC, where the Horizon set-top business went to Samsung, Pulli explained Pace had become disconnected. “We had an Intel box up and running within 30 days of getting the deal done with Comcast. How we can lose a UPC when in fact we had the only box running, again, look, I don’t know the ins and outs of it, but we’re now taking advantage of what the US is doing in Europe and Europe is doing in the US”.
One possibility is that the software and services segment of 2Wire might be extended to Europe as part of Pulli’s plan to make that segment a global business.
A troubled 12 months has seen Pace issue a string of profit warnings, culminating in Pulli replacing long-time CEO Neil Gaydon, in the light of a strategic review under chairman Alan Leighton.
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. Most recently, floods at hard drive supplier Western Digital’s Bang Pa-In facility in Bangkok impacted supplies of personal video recorders.
The Leighton review, which published its findings in November, announced plans to merge the Pace Europe and Pace Networks businesses into a single unit.
