INDUSTRY

Oracle Corp. posted a 15 percent gain in quarterly profits as improving corporate spending drove higher sales of its flagship database software while lower taxes gave results a small boost. Oracle CEO Larry Ellison chalked it up to the company's Grid computing strategy, which it launched six months ago. Since then, he said, database new license sales have been growing at a rate of 15 percent. The company, which is locked in a court battle with antitrust regulators who want to block its $7.7 billion hostile takeover bid for PeopleSoft Inc. (PSFT.O: Quote, Profile, Research) , also said it has an appetite for other multibillion-dollar acquisitions, regardless of the outcome of the PeopleSoft deal. "We have several ideas in mind. It's hard to predict when we'll do one or two or any," Oracle Chairman and Chief Financial Officer Jeff Henley told reporters on a conference call. In its fiscal fourth quarter ended May 31, Oracle's net income rose to $990 million, or 19 cents a share, from $858 million, or 16 cents a share, a year earlier, the Redwood Shores, California-based company said. Lower tax rates in the most recent quarter boosted profits by about one-half cent per share, Henley said in an interview with Reuters. Revenue rose to $3.08 billion from $2.83 billion, fueled by growth in its high-margin software license sales which contributed to record quarterly operating margins of 46 percent. Analysts on average had called for the company to post earnings of 18 cents a share on revenue of $3.07 billion, according to Reuters Estimates. The report marked the third consecutive quarter in which the No. 1 provider of high-end database software has posted growth in both earnings and revenue, helped in part by currency effects. SOME DISAPPOINTMENT Nevertheless, the results disappointed some investors and analysts, who were expecting year-on-year improvement in new business software license sales, also known as applications. While Oracle's new database software sales rose 15 percent to hit $1.07 billion in the fourth quarter, new business software revenue fell 6 percent to $231 million. "I thought the apps number was a little light," said Pacific Growth Equities analyst Jason Brueschke. He said applications sales were surprisingly weak considering the improved economic environment and the fact that Oracle had several third-quarter deals carry over into the May quarter. Sanford C. Bernstein & Co. analyst Charles Di Bona expected the decline in applications and said Oracle's numbers "seem to be pretty much in line." The analysts quoted hold no Oracle shares and their firms are not involved in investment banking. "Across the board we've definitely seen improvement. We expect that business will continue to modestly improve," said Henley, who forecast first-quarter earnings of 9 cents a share to match Wall Street's current consensus estimate. In recent quarters, Oracle has depended on improving database revenue to smooth out bumpy sales in its much smaller applications business, which goes up against companies like PeopleSoft and market leader SAP AG (SAPG.DE: Quote, Profile, Research) (SAP.N: Quote, Profile, Research) . "I'm still optimistic that we'll see our applications business do better," said Henley, who earlier this year took on the role of company chairman and stated his intention to step down as CFO when a replacement is found.