Handheld computer maker Palm and software giant Oracle have lifted technology investors' spirits with better than expected results.

Palm, the world's biggest manufacturer of pocket-sized computers, posted a profit of $3.5m for the second quarter of the financial year, bouncing back strongly from a $25.2m loss one year ago.

The figures, which reflected aggressive cost cutting, were sharply ahead of Wall Street's expectations. Many analysts had expected the firm to remain in the red.

There was encouraging news also from Oracle, the world's number three software maker, which managed to beat its own sales and profit forecasts despite continued cutbacks in technology investment by major corporations.

Shares climb

Oracle said profits after tax for the second quarter of the financial year came in at $535m, or 10 cents a share.

The figure was 2.5% down on the same period last year, but still comfortably outstripped the 8 to 9 cents a share the company had previously forecast.

Oracle's sales also fell, but the year-on-year decline - at 2.9% - was more moderate than the expected 4-7% drop.

The figures cheered technology investors, many still smarting from news on Tuesday of a surprise increase in quarterly losses at semiconductor giant Micron Technology.

Oracle shares were up 3.5% to $10.63 by the close. The stock jumped a further 67 cents to $11.30 in after-hours trade.

Palm shares also gained strongly, rising 12% in after hours trading despite news that the firm's sales had fallen nearly 9% on the year to $261m.

Spending constraints

The two firms' share prices bucked wider market trends, with both the Dow Jones industrial average and the tech-oriented Nasdaq closing lower amid escalating tensions in the Middle East.

However, the firms' weak sales figures are likely to be interpreted as a sign that a true tech sector recovery is still some way off.

With consumer and corporate spending remaining weak, most firms that have managed to increase profits in recent months have done so through cost controls rather than organic sales growth.