oh gosh, i could hardly contain my laugher... if you'd ever check't it with a scope in the first place (as my msg in the middle suggested) you'd come to this conclusion much much earlier.

Maybe the Serial Tutorial on this site should be updated with this information that a 8051 doesn't provide EIA-232 levels.

So to answer your question:
Yes, a levelshifter such as a MAX232 is needed - not only the levels are +/-12V,
they're also inverted, but the MAX232 takes care of this.

You may also use a bunch of transistors and diodes, but the MAX solution is more 'foolproof'.

Cheers, Roger