Iona Technology shares recovered strongly on the Nasdaq market after the software group said it expected to return to profit in the fourth quarter and to generate solid revenue growth next year.

The shares rose as high as $12.88 on the Nasdaq before closing up $1.33 at $11.93.

Confirming a pre-results statement earlier this month, the company reported a pro forma net loss of $2.2 million or eight US cents per share for the third quarter. Revenues were up 3 per cent at $41 million.

Analysts focused on management's comments about trading in the current quarter and the prospects for next year.

For the fourth quarter, Iona chief executive Mr Barry Morris said Iona expected revenue to grow between 5 and 10 per cent from the previous quarter.

For 2002, the group expects year-on-year revenue growth 5-15 per cent.

Mr Morris said Iona had been on track to meet its financial targets until September 11th.

After that it had been more difficult to close third-quarter business, especially with financial services companies that account for about 20 per cent of Iona's business.

All of the fall in revenue came from Iona's North American business, where sales were down 9 per cent to $26.4 million.

In contrast, Iona's European and Asia/Pacific business performed well, with sales in Europe in the third quarter up by 34 per cent to $10 million (E;11 million) and up 39 per cent in Asia to $4.7 million.

Iona concluded five deals worth more than $1 million in the quarter and 23 deals valued between $250,000 and $1 million.

The group's cost base in the quarter was reduced by a cut in the workforce by 50 to 937.

Mr Morris said he did not expect any significant change in staffing numbers in the current quarter.