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Pace and Amino CEOs depart

By PETER WHITE

Published: 16 December, 2011

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For my entire technology following life, some 25 years, the City of London in particular and Europe in general, has always failed to understand the potential for local technology businesses. Nothing more could better illustrate this as two of the UK's leading tech businesses replaced their CEOs this week - Pace Plc and Amino Technologies.

Amid calls from successive government to do more to help British and European companies to get ahead, and countless pouring of funds into technology, which all went to dull, unthinking companies who lived off Government handouts, the stock markets simply get it wrong time and time again. Even a company as innovative as Apple could not have flourished if it was European. Some group of conservative investors would have kicked Steve Jobs out, or insisted that the iPhone was too big a risk. Look how they have hobbled Vodafone.

Pace is the largest set top maker in the world, and Amino is one of the fastest growing technology companies in Europe. One has now replaced its boss with a salesman, the other with someone only qualified to cut costs. While we wish these companies and their new CEOs every success, we have to understand that you cannot fire people for running their companies well, and you cannot fire people for having a low share price. That makes sense in the US, where it is possible to have a big share price in technology, but not here.

Neil Gaydon the departing Pace CEO sounded tired when we spoke to him - he had been at the company for 16 years, the first ten sounded like a doddle compared to the last one - with three hiccups in it, one US account had decided to skip a generation of technology, there was a tsunami in Japan that affected supply lines, and there were floods in Thailand which deprived the entire world of a fulsome supply of disk drives. These acts of God were clearly the company's fault and a new Chairman Allan Leighton, (a banker with experience of running Mars, Asda and the Royal Mail - all great technology businesses) was brought in to run a strategic review.

People like Leighton know what the City expects, and although he did not actually oust Gaydon, his experience in running big, cumbersome, hardly profitable companies, is what tired Gaydon out. He outlined what he thought needed to be done, and Gaydon bowed out, not fancying it. So the man who took the business to world leadership, is now out of the picture. Imagine what would have happened if Gaydon had been running a badly run company and those things happened - like Motorola or Technicolor, the two companies he has ousted for global leadership in set tops.

But at the heart of the problem is the City's misunderstanding of what a good tech business is worth. You do the mathematics. The company is valued at £213 million, about a third of what it was worth prior to these events. But it does $2.3 billion (£1.5 billion) in revenue and grew $210 million for the first half over last year and remains profitable despite its profits taking a small knock from these unexpected obstacles. Set tops are growing globally and expected to for some while, with the proviso that they could get integrated into the home gateway, a business where Pace also thrives thanks to its longsighted acquisition of 2Wire.

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