Oracle Corp reported 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.

Its shares rose 1.2 percent in extended trading.

Oracle reported profit, excluding items, of 46 cents per share in the fourth quarter ended May 31, beating analysts' average forecast of 44 cents, according to Reuters Estimates.

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.

The company -- whose rivals include SAP AG , and International Business Machines Corp -- reported that net income fell 7 percent to $1.9 billion, or 38 cents a share, from $2.0 billion, or 39 cents, a year earlier.

(Reporting by Jim Finkle; Editing by Richard Chang)