British tech firms report signs of revival

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The Independent Online

Strong performances by the British computer chip makers CSR and Wolfson Microelectronics at the start of the year, as well as solid updates from several domestic software companies, have raised hopes that the UK technology industry will shake off the worst of the downturn this year.

Philip Carnelley, an analyst at TechMarketView, said: "Timing is everything. Yet, while there is still caution, people now say they are seeing signs of green shoots that things are starting to recover."

The chip-makers thanked the strengthening consumer electronics market and the popularity of smartphones for a boost in revenues during the first quarter. Their clients include Apple's iPhone and Research In Motion's BlackBerry, whose sales continue to soar. CSR, based in Cambridge, posted revenues of $173m (£114m) in the first quarter, more than twice that of a year earlier. Wolfson also beat analysts' expectations with revenues rising 13 per cent in the first three months to $28.5m. It expects the figure to soar to as much as $35m in the second quarter.

The picture was not so clear-cut among the software providers. Sage predicted a return to revenue growth following "pent-up demand" from its small- and medium-sized business customers who had failed to upgrade their accountancy software during the downturn. Sage said that its pre-tax profits for the first half of the financial year had come in at £178m comfortably beating analysts' consensus of £161m. George O'Connor, an analyst at Panmure Gordon, described the results were "swan-like: on the surface smooth and calm, below the waterline working like billy-o."

The IT services group Logica released a first-quarter statement showing growth in most of its regions, including the UK.

However, its revenues fell 2 per cent to £939m after a poor performance in Spain and the Benelux region. Panmure said the numbers were "better than we hoped".