A third of Marconi's 12,400 employees work in Britain

The firm said sales fell 7.6% compared with the same period last year to �339m ($610m), blaming lower seasonal production volumes and client spending.

First quarter pre-tax losses narrowed from �39m to �105m, and Marconi said it was on course to hit full year targets.

However, Marconi shares fell 35p to 575p on concerns about earnings growth.

Marconi was on the verge of collapse in 2000 after piling up �4bn in debt, and survived only after undergoing a drastic restructuring.

The company said it expected low single digit sales growth in the current year.

It also confirmed that its expected to complete the �207m disposal of its Outside Plant and Power business to US firm Emerson by the end of August.

Reducing debt

The proceeds of the sale will be used to pay off debt and meet interest payments.

Excluding OPP, sales from ongoing operations in the three months to the end of June totalled �289m, compared to �291m for the same quarter last year.

Operating losses for the period fell from �87m a year ago to �34m.

"We see more opportunities for sales of our next generation equipment and services than at any time in the last three years which gives us confidence in our medium-term growth prospects," said chief executive Mike Parton.

Born out of the industrial giant GEC, Marconi relisted on the stock market as Marconi Corporation last October.