PACE TO PAY FOR XMAS SHOPPING IN JAN 2001

Those who follow Pace will be looking out for the gross margin - whilst those who casually pick up the headlines will note the usual "cautious about ... intents of broadcasters ... competitive market going forward ...". If gross margin is maintained anywhere near 20% (and I hope and suspect it will) then the case will be very strong for a rerating, especially if results are above expectations. However, popular comment always seems to dwell on Pace's propensity to talk down prospects and to talk up competitive issues - the latter is often really just part of their sales pitch - they want broadcasters to feel that margins are wafer thin etc etc. All that said though, I am a little cautious about this first half, even though production should be well back on target or beyond. I am positive about the year as a whole and would expect some upward revisions if Pace are at all forthcoming next Monday. We can also assume that Pace are not happy with the current share price, and although tightly held (even after recent sales), they will still be concerned about interest from potential predators. It will also be interesting to see how their expense base is increasing - R&D - which the market could interpret either way. Whatever, early days still for Pace, and I hope this will be part of their message next week.