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Oracle Tops Estimates, Gives Positive Outlook

Oracle, the world's third-largest software maker, reported profit that beat Wall Street expectations Tuesday and gave a positive growth outlook for the current quarter that nudged its shares higher.

Fourth-quarter sales of new software rose 17% from a year ago to $2.5 billion. Analysts had expected 13% to 14% growth in new software sales, one of the most closely watched indicators of Oracle's financial performance.

"It was a strong quarter," said Jefferies & Co. analyst Robert Schwartz. "The real issue is the guidance."

Oracle executives said the company was taking market share from rivals IBM, SAP and BEA Systems.

Chief Financial Officer Safra Catz forecast new software sales would rise between 20% and 30% in Oracle's fiscal first quarter, more than double the pace Wall Street analysts were expecting.

The figure does not include sales of its Agile software unit. Oracle estimates non-GAAP revenue will rise by 18% to 20% during the first quarter.

Oracle also said it expects first-quarter earnings of 21 cents per share, excluding items. That is in line with the average of analysts' forecasts, according to Reuters Estimates.

"We're obviously looking for it to be our largest Q1 ever," Catz said on a conference call with analysts. "We're delivering earnings growth way ahead of our target."

SAP, a German business planning software maker, had reported in April a 10% rise in software license sales during its most-recent quarter.

Oracle had fiscal fourth-quarter net income of $1.6 billion, or 31 cents per share, compared with $1.3 billion, or 24 cents, a year ago. Revenue rose to $5.83 billion from $4.85 billion.

Excluding items, quarterly earnings totaled 37 cents, beating the average analyst forecast of 35 cents.

The results were buoyed by sales of products that were not in the product lineup a year ago. Oracle added them when it bought Hyperion Solutions, Stellent, MetaSolv and several other software makers over the past year.

Shares of Redwood City, Calif.-based Oracle rose to $19.40 after issuing its earnings forecasts, after initially slipping 2% from its close at $19.16 on Nasdaq.

Oracle was trading at about 17 times the average forecast for next year's earnings per share, in line with the future price-to-earnings ratio for Microsoft, also 17.

Technology services company IBM, the number-two software maker, trades at 14 times. Oracle is the leader in databases, ahead of IBM, and number two in business applications behind SAP, which trades at 20 times estimated 2008 earnings.

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