German chipmaker Infineon ( IFX) posted sharply higher first-quarter earnings but warned that its semiconductor business is likely to slow in its current period. The company earned about $185 million, or 24 cents a share, in the quarter ended Dec. 30, up from $44.2 million, or 7 cents a share, last year. Revenue rose 12% from a year ago to $2.37 billion. The latest quarter included $153 million in gains from a lawsuit settlement. While earnings were strong, the company's comments about the future could spook technology investors. "As anticipated in our outlook from last quarter, we have seen a slowdown in most of our application segments, a further clear market weakening and lower customer demand during the first quarter," Infineon said. "We have thus taken necessary measures to adjust inventory levels, which negatively impacted our first quarter's results." Citing customer activity and third-party market estimates, Infineon "anticipates a continued slowdown in demand in the overall worldwide semiconductor market during the second quarter of financial year 2005." Specifically, the company sees earnings and revenue falling sequentially, "due to seasonal effects, pricing pressure in all of the company's application segments, and a further decline in demand as customers continue to adjust inventory. The shares were unchanged at $9.34 on Instinet.