City investors are hopeful that the technology slump could be coming to an end after Philips said it was seeing improved sales for many of its products.
The Dutch consumer electronics firm surprised analysts when it announced on Tuesday that it had made a profit of £5.5m in the first three month of 2002. Although Philips was cautious about future market conditions, the company did say that a new upturn in the business cycle could be imminent.
"The first quarter of the year seems to confirm that markets are bottoming out, and inventory corrections have stopped, but overall market conditions are still fragile," said Philips.
In a conference call, Philips said that several of its product lines were seeing higher demand, including disk drives, monitors and DVD players. The company said it was also receiving more orders for its handset screens, and semiconductors for consumer products.
Analysts were expecting Philips to announce a Q1 loss, so news of a profit lifted the company's shares by over 6 percent. At £5.5m, though, the profits were over 90 percent lower than for the first three months of 2001 -- but still a massive improvement on the £182m loss Philips made in the fourth quarter of last year.
Experts believe that an upturn in IT spending will be driven by companies upgrading their computer systems, after putting off buying new technology last year.