Oracle Profit Beats Expectations on Sales

Oracle Corp. (ORCL), the world's second biggest software maker, on Wednesday posted a higher-than-expected quarterly net profit, boosted by the acquisition of its rival PeopleSoft (search), and its shares rose 2.5 percent in pre-market trade.

Fourth-quarter net income rose 3 percent, helped by strength in database sales and stronger-than-expected sales of applications software, which automates business processes like demand forecasting or payroll.

Excluding one-time items, Oracle (search) posted earnings of 26 cents per share, beating the average analyst expectation by 3 cents, according to Reuters Estimates.

Total revenue for the fourth quarter ended May 31 increased to $3.88 billion — in line with analysts' expectations — from $3.08 billion a year ago, boosted by Chief Executive Larry Ellison's (search) recent acquisitions spree.

"I think investors will like these numbers," said WR Hambrecht & Co. analyst Robert Stimson, who does not own Oracle stock. He said he was waiting for Oracle to give a forecast for fiscal year 2006 on a conference call later in the morning.

Oracle Co-President Safra Catz, when asked about the company's forecast in a conference call with reporters, replied, "We're very optimistic about it."

Net income rose to $1.02 billion, or 20 cents per share, from $990 million, or 19 cents a share, a year earlier.

The company said in the release that the integration of PeopleSoft, which it closed earlier this year, was going smoothly.

"The rapid integration of PeopleSoft into our business contributed to the strong growth in both applications sales and profits that we saw in the quarter," said Catz in a statement.

Shares of Oracle rose to $13.15 in pre-market trading on the Inet electronic network from Tuesday's Nasdaq close of $12.83.

Oracle said that under generally accepted accounting principles, fourth quarter total software revenues rose 24 percent to $3.12 billion.

Database and middleware new license revenues rose 16 percent to $1.26 billion, while applications new license revenues rose 52 percent to $350 million. Service revenues climbed 35 percent to $755 million.

"I think the biggest surprise in the results was the applications did better than expected," said Stimson.

The fiscal fourth quarter is traditionally Oracle's seasonally strongest period.