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Oracle says earnings rose 3.2% in fiscal 4th quarter


REDWOOD CITY, Calif. - Oracle Corp., the world's third-largest software maker, reported yesterday a 3.2 percent increase in fiscal fourth-quarter earnings, bolstered by rising demand in North America and its $10.6 billion purchase of PeopleSoft Inc.

Net income rose to $1.02 billion, or 20 cents a share, from $990 million, or 19 cents a share, in the fiscal fourth quarter last year. Sales rose 26 percent to $3.88 billion in the period that ended May 31.

The better-than-expected results helped allay concerns that Oracle is too dependent on acquisitions such as PeopleSoft for growth. North American sales of database software and business applications such as payroll programs posted their fastest growth in at least two years, helping new software sales beat analysts' estimates.

Oracle's shares rose 5.8 percent yesterday, adding 74 cents, to close at $13.57 in Nasdaq trading. That was their biggest gain since PeopleSoft gave up the fight against Oracle's hostile takeover bid in December. The shares had dropped 6.5 percent this year on concern that the company was relying too much on purchases for growth.

"We're seeing strength across the board in all our businesses," said Chief Executive Officer Larry Ellison. "We're in a positive product cycle."

Oracle is winning database customers from Microsoft Corp. and International Business Machines Corp., the world's top two software makers. In other applications, Ellison said gains with banking, engineering, health care and education clients show that Oracle is taking orders away from market leader SAP AG of Germany.

Earnings would have been higher if not for $333 million in expenses for the purchases. Without the costs, profit would have been 26 cents, beating the 23-cent average estimate of 34 analysts surveyed by Thomson Financial. Oracle also reported revenue that doesn't conform to generally accepted accounting principles of $4.06 billion, beating estimates of $3.89 billion.

Oracle predicted first-quarter profit will be 14 cents a share, matching the average analyst estimate. The company boosted its 2006 profit estimate to 78 cents to 81 cents a share, compared with a 78 cent average analyst projection. Sales will be $14.2 billion to $14.4 billion, compared with the $14.2 billion analyst average according to Thomson Financial.

"We have no plans to buy anybody that isn't consistent with our long-range targets of growing our profit in excess of 20 percent per year over the next five years," Ellison said.

Much of the gain came in databases, Oracle's biggest and most profitable unit. The company, which is closing the gap with market leader IBM, also paid an undisclosed sum for closely held Oblix Inc. and TimesTen Inc. to add to its database technology. Oracle, which lost the top spot in the $7.79 billion database market in 2002, last year cut IBM's lead to less than $30 million, according to Gartner Inc.

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