Troubled hi-tech giant Pace Micro Technology today plunged into the red as it reported that both its profits and sales had plummeted.

The Saltaire firm recorded a loss of £15.9 million for the six months to November 30, down from a profit of £22.2 million the previous year.

Pace also reported a plunge in its turnover of 61 per cent.

It announced turnover of £83.4 million in its interim results, down from the £215.8 million it reported for the same period last year.

Sir Michael Bett, Pace's chairman, said he was hopeful of an upturn in the second half of the year.

"We expect to see some recovery in performance in the second half of the financial year, compared to the first half, in terms of revenue and margin improvements," he said.

"Competition remains strong and there continue to be market uncertainties. However, with our leading-edge technology and focus on lower product costs we remain in a good position to secure new business."

He said the results were "disappointing but reflective of an industry undergoing major change".

The firm said it, along with its competitors, has experienced difficulties as "deployment of home gateways (set top boxes to receive digital and cable TV) around the world has fallen".

Pace also blamed a fall in the price of set-top boxes on the financial problems it faces.

Only two and a half years ago, Pace was reporting a 146 per cent rise in sales of digital set-top boxes.

In 2001 Pace announced to the City that its profits had ballooned by 61 per cent to more than £44 million on the back of booming demand for the boxes.

But today Andrew Wallace, Pace's marketing director, said: "It is still too early to say whether we will be making further job cuts.

"Our customers, the operators, have been doing a lot of re-structuring which has inevitably led to cuts in prices in an already tough market. The board remains convinced that it can return Pace to profitability."

Pace warned at the end of last year that it may be forced to cut jobs because of poor sales abroad.

The firm, which cut jobs last summer at its Saltaire base, has been troubled by problems in the UK digital TV market.

Pace, which has issued five financial warnings in 11 months, said the financial problems have been caused by a slump in its European and US markets.

At the end of last year Mr Wallace said job cuts were something the firm had to face up to.

He said: "We've managed to save a lot of money through non-staff expenditure, but it is difficult to say how much more we can save as this is, after all, a people business.''

At noon today the company's share price had risen 0.5p to 18p.