Pace Micro Technology, Europe's largest maker of digital TV set-top boxes, has posted a big first-half loss.

Pace blamed the loss on lower sales of set-top boxes to its two cable customers, NTL and Telewest.

Shipments to Europe's largest satellite broadcaster BSkyB were also down, while US sales were slower than expected.

We see some recovery in the second half Michael Bett, chairman, Pace Micro Technology

Pace said it made a pre-tax loss of �15.9m in the six months to November 30, compared with a �22.2m profit for the same period in 2001.

Turnover was down 61% to �83.4m.

Future

Despite the big loss, Pace said it was hopeful about the future.

"We expect to see some recovery in performance in the second half of the financial year," chairman Michael Bett said.

"Competition remains strong and there continue to be market uncertainties."

Pace was hoping to expand US revenues by building on relationships with Comcast Cable Communications and Time Warner Cable, Mr Bett said.

Comcast and Time Warner together control half of the American cable market.

Pace had a 3% share of that market in 2002.

Mr Bett added that Continental Europe and Asia, where digital TV is not as common as in the UK, were prime growth markets.

Less than 15% of homes in Continental Europe and Asia have access to digital television, compared with 40% of UK dwellings.

Shares in Pace Micro closed 0.25p higher at 17.75p on Monday.

The shares topped 1200p in March 2000, at the height of the dot.com boom.