After a 12 percent increase in the number of shares, the result was equal to 6 cents a share, compared with 5 cents a year earlier.

Sales of $2.78 million in the three months ending Dec. 31 were up 18 percent from $2.35 million.

A California analyst today held to his positive opinion of the company, although its results for the quarter were not as high as he had predicted. "From a business perspective we don't look at this as a serious setback by any stretch of the word," said David Pyrce of Van Kasper & Co. in San Diego.

Pyrce said he had predicted sales of $3.25 million and earnings of 7 cents a share.

One reason the company's numbers didn't match his, he said, was that a significant increase in production from new microalgae ponds didn't come into play until half way through the quarter. He had anticipated added production at the start of the period.

Pyrce said the company also had to pay state income tax for the first time, an expense of $175,000. Until now, previous losses had been carried forward to wipe out taxes on profits.

A positive report by another analyst, Walter Ramsley, of the Financial Research Center in Holliston, Mass., caused a flurry of trading in Cyanotech's stock yesterday, pushing it up $1.375 on the Nasdaq market to close at $7.875.

More than 375,000 shares changed hands yesterday, compared with the average daily volume of 33,247 shares.

The price dipped today, after the earnings came out lower than analysts had predicted. Cyanotech closed at $7.125, down 75 cents. Trading volume was high again at more than 340,000.

Gerald R. Cysewski, Cyanotech president and chief executive, said the company's nutritional product, Spirulina, still gets most of its sales in Asia despite competition from lower-cost, lower-quality Asian products.

Export sales went up 71 percent in the company's third fiscal quarter. More than half of Cyanotech's total sales were to a Hong Kong-based natural products marketing company that does most of its sales in China, he said.