The company reported a fourth-quarter net profit of 49 million eurosmillion dollars) compared to a loss of 116 million euros in the third quarter of its business year -- the first time it had recorded a profit after nine consecutive loss-making quarters.

The fourth-quarter result compared with a loss of 506 million euros in the same quarter of 2002 and was at the low end of analysts' expectations ranging from 44.8 million to 97.1 million euros.

Looking ahead, the company said it expected to post a profit in the business year to September 2004 but did not give a specific number.

The fourth-quarter result brought Infineon's full-year net loss to 435 million euros, reduced from 1.02 billion euros in the previous business year.

In the fourth quarter, core profits, measured as earnings before interest payments and taxes, came in at 67 million euros, up from a loss of 116 million euros in the third quarter and a loss of 295 million euros in the same quarter in 2002.

Sales rose 37 percent in the fourth quarter to 1.76 billion euros from the same period in the previous year bringing sales for the full 2002-2003 business year to 6.15 billion euros.

"The company noted stronger demand as well as manufacturing cost reductions in its memory products business group and, since the second half of calendar year 2003, rising chip prices for its memory products," it said in a statement.

Shares in the company fell, with some investors disappointed by the results and concerned about possible legal troubles over investigations into the violation of antitrust laws.

Deutsche Bank analyst Nicolas Gaudois said: "We find the outlook a bit disappointing"

"We were surprised not to see demand growth in the (end-)December quarter," he added.

Infineon said it expected a stable level of demand during the first quarter to end-December for its memory products.

But that was not all on investors minds. "The market is worried about potential legal implications," Gaudois said.

The company said it had made a provision of 28 million euros in the fourth quarter for possible fines from the US Department of Justice or the EU Commission.

The US authorities had been investigating possible violations of antitrust laws in the computer memory chip industry since June 2002, Infineon said.

The European Commission had not launched proceedings against Infineon, but has requested information with respect to practices in the European market, the company said.

"An adverse final resolution of one or more of these matters would result in material financial liability to ... Infineon which would have a material adverse effect on its business ... and financial condition," it said.

SPACE.WIRE