It blamed tough markets and falling demand as first quarter sales dived 31% to �367m ($587m) from a year ago.

And Marconi, which recently completed a huge debt-for-equity swap to stave off collapse, said its second quarter sales were likely to be flat.

However, the group said it had slashed its �4bn debt mountain to a more manageable "hillock" of �783m.

Spending 'to rise'

Once an icon of British industry, Marconi was forced to sell units and axe 6,000 jobs after the high tech bubble burst in 2000.

A �4bn restructuring, which handed 99.5% of the company's equity to its creditors, was completed in May.

The firm said it was optimistic that the telecoms companies it sells to would increase their spending in the long-term.

Marconi chief executive Mike Parton said: "Our markets remained very difficult during the quarter but there are positive signs that give us confidence for the longer term."

"For the first time in over two years, many large network operators are beginning to forecast increases in capital expenditure but it will take time for these plans to flow through into orders and sales."