The company, whose smartcards are used in mobile telephones and debit/credit cards, posted a third quarter net loss of 13.1 million euros (15.3 million dollars) compared with 38.6 million euros in the same period in 2002 and was better than anlysts expectations for a loss of 18-36 million euros.

The result, which reflected a 7.2-million-euro charge for restructuring, was also much better than the 82.4-million-euro net loss recorded for the second quarter of 2003.

However, sales fell 7.6 percent in the third quarter to 190 million euros.

On the operating level, the company broke even in the third quarter as restructuring measures began to bear fruit.

Chief executive Alex Mandl said in a statement: "Breaking even at the operating level during the third quarter is the best evidence that we continued to make progress against the plan we announced in December 2002.

"Our restructuring initiatives have enabled the company to respond well to a challenging business environment.

"Our operating costs have been further reduced, helping to improve returns across the group," he said.

Investors welcomed the improvement, bidding Gemplus' shares 3.98 percent higher to 1.83 euros in morning trading here while the CAC 40 index of leading French shares showed a gain of 0.69 percent.

Looking ahead, the company said it expected the weakness of the dollar to remain a burden, but said demand from the mobile phone industry in the United States was "encouraging".

Prospects for smartcards in the finanical and security industries were also "solid", it said, although government ID and corporate security represented opportunites in the long term.

SPACE.WIRE