Supply chain problems resulting from the Japanese earthquake/tsunami have led international set-top box maker Pace PLC (LSE: PIC) to cut profit expectations despite a 24 percent increase in first quarter revenues and a strong performance by its U.S. unit.
The company's stock fell 40 percent after it said that its profits were down and its costs were up because, among other things, it stockpiled parts to meet orders and the Japanese disaster exacerbated the situation by helping tighten the supply chain environment.
Neil Gaydon, Pace's chief executive, admitted that "we have made a disappointing start to the financial year with our profitability" and suggested things would get better in the second quarter, but not enough to make up for the first quarter boondoggle.
"This is not a disastrous statement but it is a further hit to management and company credibility," said Ian Robertson, a Seymour Piece analyst, adding that the company's update "does not make for good reading."
- the Express & Star has this story
- see Pace's interim management statement
Pace slowed as U.S. customer delays set-top box order
Q&A with Mike Pulli, president of Pace Americas