But it is still facing a hard time in the embedded market, which was what caused it to issue the profits warning in August that led to its stock dropping 20%.

Pro forma net income fell 30% compared to Q3 2003 to 4.9m ($8.9m), or 9p per share, on flat revenues of 53m. When it restated its estimated pro forma earnings per share in August it predicted a figure of 7-8p.

"Despite the difficult business environment, we were able to achieve EPS above our revised expectations," said chief executive Guy Gecht. "While we are still seeing softness in our embedded business, we remain committed to maintaining solid profitability and investing in key growth areas, particularly software, where we still see strong market opportunities."

Revenues from Professional Print Applications (PPA) rose 374% to 9.2m. They now account for 17% of revenue. Shares closed up 4.5% at 9.42.