Pace founder backs Gaydon
By Chris Forrester

Last week was not a good one for the world’s top set-top box supplier Pace. A profits warning issued by the company managed to wipe off 40 per cent from the company’s value, amid calls for CEO Neil Gaydon to be sacked for what one analyst described as “a chaotic range of excuses”.

Altium Securities suggested that the results showed the company needed to “refresh … [its] leadership team…. and the statement offers a list of reasons that contributed to the lowered margin expansion, none of which seems to be credible in our view,” Arun George at Altium bluntly stated. Ian Robertson of Seymour Pierce said some of the excuses were better than others. “Some of the reasons are credible and sensible, but there are others which look a bit like: ‘The dog ate my homework.’” Robertson said it was unclear how the tsunami has affected the company: “People want to think this is an easy-to-predict company. It isn’t, it’s very volatile.” Another comment came from FinnCap who said there “were some very unhappy fund managers out there.”

Last week, Pace chairman Mike McTighe stepped in with a 20,000 share purchase on May 11 (at 96p) to show support for the business. In considering any potential board changes, McTighe was reminded by some that Gaydon has taken the company to huge profit improvements over the past five years and boosted revenues from £175 million to £1.2 billion. He might be minded to fire the firm’s financial advisors, which is where Pace’s co-founder stepped in.

Pace’s co-founder (and still a major shareholder) David Hood said: “I think there has been a massive over-reaction, the fundamentals are still sound. I am strongly behind Neil. I think he has made a remarkable turnaround in the company’s fortunes and he has strong internal support from the staff, which is always a good sign.” He also blamed the firm’s PR handling, adding: “I think the way the announcement was made was very poor. I don’t yet really understand the timing, just two days before the AGM. Poor financial PR has always been one of Pace’s weaknesses, and I think they have been very badly advised yet again. This is one area where I would like to see changes made.”