Oracle Corp issued its strongest sales forecast in more than a year as a rebound in corporate technology spending boosted demand for its computer programs.

But Oracle shares, already hovering at a nine-year high, fell 1.5 percent after its quarterly earnings report on Thursday as some investors questioned whether there was much more room for the stock to rise after a recent rally.

The Silicon Valley-based company run by billionaire Larry Ellison forecast that new software sales would rise between 3 percent and 13 percent during its current quarter. It was the first time in more than a year that Oracle did not tell investors that sales might fall.

The report from the company that bought money-losing Sun Microsystems in January for $7.5 billion suggests that technology spending by businesses is on the mend after collapsing a year ago. Oracle, which reports earnings a month ahead of its peers, is seen as an industry bellwether because of its size.

It's very nice to see Oracle guide to growth, said Goldman Sachs analyst Sarah Friar.

Oracle also projected earnings, excluding items, of 52 cents to 56 cents per share for the current quarter, which ends May 31, versus the average analyst forecast of 53 cents, according to Thomson Reuters I/B/E/S.

Oracle President Safra Catz said on a conference call that the company had a very big pipeline of potential deals as it entered its current, fourth quarter, traditionally the strongest period of the company's fiscal year.

We are quite optimistic with our customers' appetite for our products. We do find a lot of enthusiasm among our customers, she said.

During the conference call Catz said that she made her forecasts based on a reasonably conservative estimate for the percentage of deals in the pipeline expected to close during the quarter.

Ellison, the brash 65-year-old billionaire, who just claimed the America's Cup sailing trophy, said Oracle is on track to meet financial targets it has laid out for Sun.

He has said it would post $1.5 billion in operating profit, add at least 15 cents per share in earnings, and ring up $9.6 billion in revenue in the fiscal year that ends in May 2011.


Oracle posted a third-quarter profit, excluding items, of 38 cents per share, above the average Wall Street forecast of 37 cents according to Thomson Reuters I/B/E/S, and above year-earlier earnings per share of 35 cents.

Revenue at the company, whose rivals include International Business Machines Corp , SAP and Hewlett-Packard Co , rose 17 percent to $6.4 billion. The average Wall Street forecast was for $6.3 billion.

New software sales rose 13 percent from a year earlier to $1.7 billion, though they only climbed 10 percent after excluding programs from Sun Microsystems, which Oracle acquired in January. Three months ago, the company forecast that sales of software, excluding programs from Sun, would decline 1 percent to increase 9 percent.

Investors focus on new software sales because they are a forward indicator of Oracle's profit. Customers generally sign maintenance contracts when they buy software, which locks in predictable, recurring revenue.

Oracle results follow a bullish outlook from software maker Adobe Systems Inc on Tuesday.

Shares of Oracle had hit a high of $26.25 on Nasdaq before closing up 28 cents at $26.04. The stock fell to $25.66 in extended trading.

The sentiment on this stock was positive heading into the numbers, said Deutsche Bank Securities analyst Tom Ernst. People expected good things from Oracle because it's a macro sensitive business.

(Reporting by Jim Finkle; Editing by Richard Chang, Leslie Gevirtz)