It has proved to be very prophetic.

Pace Micro Technology announced to the City last July that its profits had ballooned by more than 61 per cent on the back of the booming demand for boxes to allow a generation of couch potatoes to tap into dozens of channels.

But there was a passing note of caution - Finance Director John Dyson knew there would be tougher times ahead as, pre-September 11, the world was already watching overheating economies turn on their heels and head into recession.

He believed Saltaire-based Pace could suffer as a result, forecasting: "Our growth will be affected by the economic slowdown around the world, but we still think the US market will grow from 16 million to 18 million boxes and we hope to ship more than 700,000 of those."

They saw 90 million potential customers and forecast that US penetration would stand at between 70 and 80 per cent by 2005. Analysts say it is more likely to stand at 56 per cent.

Many in the City wanted more announcements of deals in the US to follow those with Time Warner Cable and Comcast. The last of those was almost two years ago and although bosses say they are still in talks with other cable companies, there has been little evidence of them coming to fruition.

That has hit Pace hard - and now they have issued their third sales warning in a row.

The boom never really came and analysts today - with the benefit of hindsight, of course - suggest Pace's management had been far too optimistic.

The company still relies on home markets, and much of that business has come from giant cable company NTL and its competitor Telewest.

In the early days of 2001, as the world was celebrating a new millennium and praising the passing of those dreaded fears of 'the Bug', Pace said it was increasing shipments to Telewest and NTL, the darlings of the cable company world.

Now they are wracked by debt and talk is of mergers and collapsing markets.

Some see merger as the light at the end of the tunnel for NTL and Telewest - and possibly Pace. But NTL, which has a debt burden of £12 billion, and Telewest, which has a debt burden of more than £5 billion, have quashed rumours of that merger. NTL is currently examining restructuring options for its debt bill. But Telewest has quashed concerns that it might follow suit to refinance its own £5.1 billion debt pile.

The two firms have been hitting operational performance targets, but investors have seen many telecoms companies go bankrupt this year and are increasingly wary of the cable operators' ability to cover interest payments on their debts.

Pace added to the worries - and faced its own concerns as a result - when it announced that it could not ship 300,000 boxes to NTL because the cable company could not get credit insurance to cover the shipment until after it resolved its debt problems.

Pace's shares fell 67 per cent at the news of its third sales warning in recent months, which also pushed Telewest shares down 20 per cent to a record low of 11 pence.

A source close to NTL said it was in talks with other suppliers about the future order of 300,000 boxes and that it had enough boxes to meet existing demand. And that could leave Pace sweating. But it knows there may be boom times ahead.

It is still in talks with the big terrestrial TV players who are looking to do a deal on cheap boxes - about £100 a time to you and me - to access some free digital channels from the BBC and ITV.

It may be then it can gain some stability to keep it ticking along until it can finally crack the American dream.