A string of profit warnings and a dive in its share price have cost Neil Gaydon his job as chief executive of Pace.
The troubled set-top box manufacturer on Wednesday said that Mr Gaydon, who has headed the Yorkshire-based group for five of his 16 years at Pace, would step down with immediate effect. He will be replaced by Mike Pulli, who moves from his position as head of the group’s US division.
Mr Gaydon told the Financial Times he had been discussing his departure with Allan Leighton, Pace’s new chairman, for several months.
“After 16 years at the company and with the strategic review under way, I felt this was the right time to go,” he said. Mr Gaydon said he would take some time off before deciding on a new challenge.
In October, the FTSE 250 company blamed severe flooding in Thailand for the group’s third profit warning of 2011 and further cut its full-year forecast from $150m-$170m to $141m, which knocked its shares down by nearly a quarter in a single day.
This followed an earlier cuts in the profit forecast that Pace attributed to supply-chain problems following the Japan tsunami, as well as the March discovery by analysts that an order from a large US customer had been delayed until 2012 – a fact that Pace neglected to report in its annual results statement released on the same day.
“People had a lot of respect for Neil but had lost patience with the company’s communications failures, so maybe a more straight-talking American CEO is the way to go,” said Jonathan Imlah at Collins Stewart.
“With a new five-year plan in place, it was probably time for the injection of some new blood. It will be interesting to see if further changes at the top are forthcoming. It would be a surprise if they weren’t.”
Pace’s head of communications stepped down from the company this year.
Mr Gaydon’s departure comes on the same day that Andrew Burke left as chief executive of Amino Communications, a smaller, Cambridge-based set-top box developer, another indicator of the pressure that the sector has been under.
Pace said that Mr Pulli’s seven years’ experience in charge of its US arm sets him in good stead to take the helm of the Saltaire-headquartered group. He is expected to remain based in the US, close to the company’s largest customers.
“Mike has developed a hugely successful business for Pace in the Americas, and his background and gravitas in the industry make him the right leader to succeed Neil and deliver our strategic plan,” said Mr Leighton.
Mr Gaydon has been credited by industry observers for turning round Pace from being lossmaking in 2006 to its position as the world’s biggest maker of television set-top boxes by shipments after it overtook Motorola and France’s Technicolor last year.
The axing of Mr Gaydon follows a strategic review to reorganise its European business by Mr Leighton, who took over as chairman this summer.
“We were unimpressed by the strategic review but look forward to hearing what exactly Mr Pulli is going to do with this business when he presents the full-year results in the new year,” said Ian Robertson at Seymour Pierce.
“We suspect that, given his actual hands-on understanding of the industry, the strategies he applies could be a little more pragmatic and little less ‘strategic’ than presented in November.”
Pace shares, which were trading above £2 in March, on Wednesday rose by 0.9p, or 1.4 per cent, to 67.65p.