The television set-top box maker Pace Micro Technology has warned investors that it may go into the red during the six months to 1 June.

The announcement reverses an earlier forecast of a profit and comes just five weeks after the firm issued its third sales warning in six months.

Pace blames its difficulties on the current troubles facing digital television operators.

It has stopped shipments to cash-strapped NTL after failing to get credit insurance, and also supplied ITV digital which has been put into administration.

Pace make boxes which can convert cable, satellite and terrestrial digital signals for analogue televisions.

The company also said it would look to cut costs, with job losses a possibility.

The company's shares dropped 21% to close at 79p.