Oracle Corp reported a higher-than-expected 13 percent jump in new software sales as a rebound in corporate technology spending boosted sales of its business computer programs.

But Oracle shares, already hovering at a nine-year high, fell almost 1 percent as some investors questioned whether Chief Executive Larry Ellison would be able to make good on a promise to quickly turn around money-losing Sun Microsystems, which Oracle bought in January for $7.5 billion.

Oracle projected earnings, excluding items, of 52 cents to 56 cents per share for the current quarter, versus the average analyst forecast of 53 cents, according to Thomson Reuters


The report from the world's biggest maker of database software on Thursday 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 a nice sign of a rebound in technology spending, said Goldman Sachs analyst Sarah Friar.

Oracle President Safra Catz said on a conference call that the company had a very big pipeline of potential deals as it entered its 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.

The Silicon Valley-based company forecast that new software sales would rise between 3 percent and 13 percent during the fiscal fourth quarter, ending on May 31.

Catz told investors that she made the calculation based on a reasonably conservative estimate for the percentage of deals in the pipeline expected to close during the quarter.

Chief Executive Larry Ellison, the 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 $25.80 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)