Oracle Corp beat Wall Street's earnings estimates as new software sales came in at the high end of the company's forecast, offsetting a sharp drop in hardware revenue.

The software maker's stock rose 2.6 percent after the news, in sharp contrast to the sell-off three months ago when its second-quarter profit missed analysts' forecasts for the first time in a decade.

Oracle estimated that new software sales this quarter will range from a 2 percent drop to growth of as much as 8 percent, translating into $3.6 billion to almost $4 billion.

But revenue from hardware, a persistent weak spot for the software firm, should come in between $870 million and $980 million, executives told analysts on a conference call. Some analysts had expected hardware revenue of more than $1 billion as the company turned the struggling division around.

Oracle posted profit, excluding items, of 62 cents per share in its third quarter ended February 29, beating the average forecast of 56 cents of analysts surveyed by Thomson Reuters I/B/E/S.

It's a pretty significant turn, said Daniel Genter, president and chief investment officer of RNC Genter Capital Management. The only weak spot was they're a little low on the hardware.

Software sales rose 7 percent from a year earlier to $2.4 billion, at the high end of Oracle's own forecast.

Oracle, the world's No. 3 software maker after Microsoft Corp and International Business Machines Corp, had forecast that new software sales would climb between 0 to 10 percent from a year earlier when it last reported earnings on December 20.

Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of Oracle's future profits.

To be sure, the 7 percent growth posted in the third quarter is lower than in previous periods, which does not bode well for future earnings, said Kim Forrest, an analyst with Fort Pitt Capital Group.

In fiscal 2011 they were in the double digits, and now they are in the single digits. That's never a good trend, she said.

The company also reported on Tuesday that hardware product sales fell 16 percent to $869 million. It had forecast a decline of between 5 and 15 percent.

Oracle shares rose to $30.89 in extended trade from their Nasdaq close of $30.10.

(Reporting By Jim Finkle; Additional reporting by Liana B. Baker, Nicola Leske, Noel Randewich; Editing by Richard Chang)