In the first full quarter following its $10.6 billion acquisition of PeopleSoft, Oracle's profit rose 3. 2 percent, easily exceeding Wall...

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SAN FRANCISCO — In the first full quarter following its $10.6 billion acquisition of PeopleSoft, Oracle’s profit rose 3.2 percent, easily exceeding Wall Street’s expectations thanks to strong sales of database software in the United States.

Oracle’s shares rose 74 cents, or 5.8 percent, to close at $13.57 yesterday, after the report was released earlier in the day.

Oracle reported yesterday morning fourth-quarter earnings for fiscal 2005 of $1.02 billion, or 20 cents per share, up from $990 million, or 19 cents per share, in the same period last year.

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In the period ended May 31, the company reported revenue of $3.88 billion, up 26 percent from the fiscal fourth quarter of 2004.

Excluding certain expenses, including costs related to merging the sales forces of Oracle and PeopleSoft, the company reported a profit of $1.36 billion, up 35 percent from the same quarter last year. The company reported adjusted earnings of 26 cents per share, up from 19 cents per share in the same quarter last year.

Analysts polled by Thomson Financial expected the 50,000-employee company to earn an adjusted 23 cents per share on revenue of $3.89 billion in the latest quarter.

For the full fiscal year, Oracle earned $2.89 billion, or 56 cents per share, up 8 percent from $2.68 billion, or 51 cents per share, in fiscal 2004. Full-year revenue was $11.8 billion, up 16 percent from fiscal 2004.

Oracle, a Silicon Valley icon that spent $40 million on restructuring charges last quarter, did not break out sales or profits that would have come from PeopleSoft. Oracle executives have promised that the acquisition would boost annual profit by at least $400 million in the fiscal year that ends in May 2006.

In a conference call, Oracle President Safra Catz said breaking out separate numbers for both companies was “irrelevant.”

“We really merged the sales organization entirely,” she said. “There are no PeopleSoft salesmen or Oracle salesmen.”

“It was a pleasant surprise,” said Jim Shepherd, vice president of research at Boston-based AMR Research. “This is an area everyone is looking at given the huge PeopleSoft acquisition, and this was the first quarter we could get a picture about how far along they were in integrating the two businesses and how much success they’re having restarting momentum for the application business. On the basis of the first quarter [after the merger], it looks quite good.”

Executives emphasized that the company, which has $3.89 billion in cash, would continue to pursue an aggressive acquisition strategy in fiscal 2006.

“We have no plans to buy anything that doesn’t contribute to our long-term strategy and profit margins of 20 percent per year over the next five years,” Chief Executive Larry Ellison said.

In December, PeopleSoft shareholders agreed to accept a sweetened bid from Oracle, bringing a tumultuous, 18-month hostile-takeover battle to an end. The $10.3 billion deal created the world’s second-largest business software manufacturer after Germany’s SAP.

The $24 billion business-software market is rapidly consolidating as companies try to maintain double-digit percentage earnings growth and drastically slash costs.

SAP of Germany has long been the industry leader, but Oracle has recently been closing the gap with several high-profile acquisitions, and in April it outbid SAP for Minneapolis-based retail software company Retek.

Although the two companies have never seriously discussed a combination, SAP CEO Henning Kagermann told a German business magazine in April that he’d “listen” to any offer that would benefit shareholders, including a merger with Oracle.

Despite the mergers, competition remains intense.

Yesterday, SAP extended a program aimed at poaching customers from Oracle and its two recent acquisitions, PeopleSoft and J.D. Edwards. The program credits up to 75 percent of software licensing fees if users switch to SAP products.

Earlier this month, Oracle retaliated with its own program, brazenly called “OFF SAP.”