Marconi completed a major restructuring last year

The firm, which is continuing to regain ground after a near-collapse in 2003, saw sales hit �378m ($668m) in the three months to 31 March.

It added that the rise over the third quarter would have reached 6% without currency fluctuations.

Marconi, which is today 99.5% owned by its creditors, thanked an increase in demand for its broadband equipment.

Ongoing recovery

It predicted that sales would continue to increase by "low single-digit" numbers throughout its next business year - April 2004 to March 2005.

We see broadband access as the thing that's going to kick-start the industry Marconi boss Mike Parton Chart the ups and downs of Marconi's share price

This would be the first time in four financial years that the company reports an annual sales increase.

"What we are seeing every quarter is a reduction year-on-year in the rate of sales decline," said Marconi chief executive Mike Parton.

"We see broadband access as the thing that's going to kick-start the industry."

A former industrial powerhouse, Marconi axed 6,000 jobs and got inself into seemingly insumountable finacial difficulties last year after a disastrously over-the-top move into telecoms.

To save itself it was forced to accept a �4bn restructuring deal which gave the company to its creditors.

James Crawshaw, an analyst at Commerzbank, said Marconi's growth forecast compared favourably with recent guidance from US telecoms firms, but was not the sort of steep upward curve needed to ignite its shares.