FW: Sky+ Not Winning Consumers As Hoped

["Kenneth Watt" <kennwatt@xxxxxxx>]

> Pace adaptor
>
> Shares in set-top box manufacturer Pace Micro Technology crumbled
today
> after it revealed a revised contract with BSkyB would slash millions > from its profits.
>
> Although Pace insisted it would benefit in the long term from the
> agreement, the company's shares plunged 44% to a new low in early
> trading.
>
> According to the revised contract, Pace will now supply its Sky+
> personal video recorder, which is capable of pausing and rewinding
live
> TV as well as recording programmes according to a viewer's
preferences,
> at below cost price until next April.
>
> Pace will then take a cut of the =A310 monthly subscription that Sky+<= BR> > users pay to have programme information downloaded to their box. This<= BR> > agreement will last until at least 2004.
>
> The move is designed to allow Sky to cut the price of the box and
> stimulate interest among subscribers.
>
> To date, just 25,000 Sky+ boxes, which cost =A3300 in addition to the<= BR> > monthly subsription of =A310, have been sold to SkyDigital's 5.9 milli= on
> customers.
>
> Pace said BSkyB had made further commitments to buy its standard
set-top
> box product but added the revised deal meant profits would be =A31.7m<= BR> > below target.
>
> Analysts had expected the company to make profits of =A317.1m this yea= r.
>
> The Pace marketing director, Andrew Wallace, said the group had been > forced to work with what was on offer from BSkyB but added it was &quo= t;an
> important new deal for us". Mr Wallace said he was convinced the<= BR> product
> would generate "high volumes once the prices come down".
>
> Pace shares have already been hit this year by NTL's financial
troubles,
> which forced the manufacturer to postpone shipments of set-top boxes to
> the cable firm
>

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