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Oracle Earnings Decline, but Top Analyst Expectations

Oraclereported earnings above expectations on Tuesday as the world's No. 3 software maker's profit margin hit a record and software sales fell less than analysts had projected.

The database and software giant said it earned 46 cents a share excluding one-time items in its fiscal fourth quarter, versus a profit of 47 cents a share in the same period last year.

Sales in the most recent quarter reached $6.86 billion, compared with $7.281 billion last year.

Oracle was expected to turn in a profit of 44 cents a share on a topline of $6.47 billion, according to a consensus estimate from Thomson Reuters.

Oracle's headquarters in Redwood City, California.
Paul Sakuma
Oracle's headquarters in Redwood City, California.

Shares of Oracle , which closed 0.5 percent lower at $19.87 Tuesday, rose about 2 percent in extended trading. Get after-hours quotes for Oracle here.

For the current quarter, Oracle expects revenue to decline 1 percent to 4 percent from last year. Analysts had been predicting a 5 percent decline.

Profit should be 29 cents to 31 cents per share, excluding one-time items, Oracle said. Analysts were expecting 30 cents per share.

New software sales, a closely watched revenue measure, fell 13 percent to $2.7 billion. Analysts were expecting them to decline about 18 percent.

The technology giant had helped set analysts' forecasts in March, when executives warned that the recession and strong dollar would take a substantial bite out of profits. Since then the economy has stabilized and the U.S. currency has weakened, setting Oracle up to beat those conservative estimates.

Oracle, led by billionaire Larry Ellison, said its adjusted operating margin was 51 percent, up 2.4 percentage points from a year-ago.

Oracle's revenue from software license updates and product support bumped up 8 percent to $3.05 billion in the latest quarter. That segment made up 44 percent of Oracle's overall revenue.

Oracle is the world's leading maker of database software, and has been expanding aggressively into other areas, like business applications.

It's even going to make hardware now, provided its $7.4 billion acquisition of server manufacturer Sun Microsystems goes through this summer as expected.

With the acquisition, Oracle will become more of a one-stop technology shop, like IBM and Hewlett-Packard.

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